In an interview to CNBC-TV18 technical analyst, Sudarshan Sukhani of s2analytics.com shared his reading and outlook on the market.
Below is the verbatim transcript of Sukhani's interview with CNBC-TV18:
Q: For an intraday target, how should a Nifty trader approach the market?
A: We still want to be long in the market. Yesterday, we suggested buy in the morning and if the Nifty closes above 6,000, carry some positions home. If the traders have done that, they are going to get the advantage of a gap-up today.
The bias remains on the long side. Maintain your long positions if you are carrying them. For intraday trading, look to buy the Nifty not at the open -- today we will get some consolidation.
The basic idea is that the market thrust remains up, momentum is on the upside. We are now approaching 6,110, which was the year high. If the Nifty crosses that then this entire scenario of the intermediate trend also changes. We will all watch with interest what happens.
Do not go short, this is not a market where you want to sell, stay on the long side.
Q: Do you have a buy on Bombay Dyeing and Manufacturing Company today?
A: It has not come in our list because Bombay Dyeing and Manufacturing Company, together with the other textile companies, was falling relentlessly. You cannot short it. It is not in the F&O anymore. Two of the three stocks Raymond and Century Textiles and Industries have now given rallies. Both came in our buy list over the last 7-10 days.
Bombay Dyeing and Manufacturing Company is giving us the same pattern that Century Textiles and Industries and Raymond have given. It has built a base and it is on the verge of breaking out. If we buy now, we could be participating in the breakout. We are literally buying at the lows. The sign suggests that a breakout is eminent. If it does not work today, hold on the position, it will work tomorrow. You are buying equities in any case. It is worthwhile looking at the entire scenario.
Q: You have a buy on IFCI as well. Is that a risky call because it has had one up day, one down day?
A: All trades are risk calls. Short-term trading is risky inherently. We had a buy call on IFCI earlier. It was making a flag and then it broke out of that bullish flag. It is making a similar flag now and it just broke out yesterday. That tells us there is lot of momentum on the upside. This is not a stock I would even consider putting in my portfolio or even for a position trade. Momentum does strange things. This is a perfect buying opportunity. A flag breakout, higher levels are likely to come. All these up and down days that you refer to were part of the flag. That is behind us now.
Disclosures: Sudarshan Sukhani has no holdings in any stocks discussed.
Q: What do you think about Oriental Bank of Commerce (OBC), you are still cautious on this public sector undertaking (PSU) lot?
A: Yes. I am cautious on banks. We will get upbeat on banks once the Bank Nifty crosses 12,800 and makes new highs like Nifty. Till then this is a trading range.
So many PSU banks are doing badly. OBC is one of the worst performers. For the last three days, it is making small narrow range days while the Nifty has been roaring on the upside. If there are any choppy conditions in the Nifty today, the chances are OBC will start falling, literally collapsing. It is a short sell, it is also a hedge. If you have long positions, basically wait for the markets to open and sell in any kind of minor strength in OBC.
Q: Chambal Fertilisers and Chemicals is also a sell?
A: Chambal Fertilisers and Chemicals has made a large trading range. It was falling relentlessly. That decline started from a strong resistance level. Now, it has broken down from support. So, a trading range has broken on the downside. This is a stock that is not participating in this amazing rally. So nobody wants to buy it.
It is in the F&O, you could go short in it. So, it is a selling opportunity. Like OBC, the chances are that in any choppy market condition it will fall more.
Q: You have a buy on Hindustan Unilever Ltd (HUL) for today, tell us about that?
A: It has been a favourite for me. This is not going to be the end of HUL's upmove not necessarily now. For a positional trader, you still look at a target of about Rs 1,000. After that big rally, HUL was in a trading range for three days. Yesterday for the first time towards the close, it suggested that it is now willing to move up again. Such a rally requires a resting period. It has probably taken that rest. It is one of the better buying opportunities in the Nifty today.
Q: You also have a buy on Godrej Industries?
A: Godrej Industries has bottomed out at Rs 265. It has been moving up, it has come in our buy list earlier. It has similar pattern of a small flag and that flag now is on the verge of breaking on the upside. Flag formations are very attractive buying opportunities. They give us a dip and that dip is just shallow enough to say okay, the trend has not changed. I would expect Godrej Industries to do nice things on the long side. This market is so far in the control of bulls, we prefer the buying rather than to look at short sells.
Q: Nifty has settled at that 6,064 level in pre-opening, if you go long this morning, where should you place your stop loss?
A: Yesterday we went long at the open. Today there is no rush. We will go long once the market settles and there is a consolidation or even an intraday dip. We continue to carry the long positions we initiated yesterday.
To answer your question for the day trader, a stop should be put at 6,000. If the Nifty trades below 6,000 even intraday then clearly something has gone wrong. I do not think that is going to happen but that is a stop we must keep in mind.
Q: How do you approach a name like Tata Steel now, it has moved from Rs 300 to Rs 330 in the last five-six days, would you back it some more?
A: Yes, I would back Tata Steel some more, another 1-2-3 percent. That is the intraday gains. So for an intraday trader, 1 percent gain is also a handsome amount. It still is a buy.
Q: Jain Irrigation Systems has moved 17 percent in the last week. Is that good for more or would you get cautious here?
A: Jain Irrigation Systems is just on the verge of breaking a significant earlier top. Once it does that, it is probably good for more. As of now, we can pause and let the stock also pause. Once this starts making new highs again for the last uptrend then we will go long in it. So essentially above Rs 71-72, there is a strong buying opportunity.
Q: What about Bharti Airtel? It usually tends to hit a wall around these levels but this time is it looking like there is more strength going for it?
A: Yes. It does so. It has made a large double bottom and is on the verge of confirming because earlier it rallied all the way to Rs 340 and then fell to Rs 290-300 on the back of news. It has come back to Rs 340 level. I would assume that if the Nifty is going to go up then Bharti Airtel will be a contributor. So we should be looking to buy here. If there is any intraday dip, one should go long in Bharti Airtel.
Q: Sintex Industries moved up yesterday post its earnings, what would the approach be today?
A: We want to buy it. It has fallen a lot. Yesterday's rally is just probably the beginning of a stronger momentum driven rally. One should stay on the long side.
Q: How would you approach something like SKS Microfinance?
A: You keep a stop loss and with that stop loss you want to be long in it. I have mentioned the stop loss first because SKS Microfinance has not given us a clear breakout sign. We are anticipating a breakout. So one should protect the trade and then be on the long side.
Q: You were talking earlier about the intermediate targets for the market, assuming we get to somewhere near our highs for the year, would the intermediate direction or targets change significantly for the market?
A: A market that makes new highs and crosses an earlier high is giving us a message of strong momentum. We are on the verge of doing that. If we do that then the sense that we are going towards 5,200 or even 5,100 is lost because we are not breaking lows, we are breaking highs on the upside. So, the market temperament has changed or the trend has changed. That has significant implications. It means that 5,500 will become the final low, a correction in an ongoing uptrend. We will evaluate it but as of now, we keep on saying stay with momentum, stay with the longs, stay with the buys and once Nifty crosses 6,100-6,115-6,120 decisively then we will become much more ambitious.