Sudarshan Sukhani of s2analytics.com says choppy markets offer best buying opportunities as he lists his contrarian calls for the week.
Below is the edited transcript of the analysis on CNBC-TV18
Q: On Friday the Nifty slipped below 5,950. Would you start become cautious at these levels and do you plan to sell on every move on the upside?
A: Friday was a bad day and the Bank Nifty fell as expected. So after leading the upswing, it is likely to lead the downtrend. For the Nifty, the level of 5,950 was below the limit at which long positions should be closed. So at this point, the Nifty does not offer trading opportunities.
It is too early to short-sell. The market is likely to remain choppy and if it trades below 5,950 then short selling is probably justified at least for intraday trading. For short-term trades, the markets could move around a bit before settling down. There has been a very big run up and a correction is likely to be imminent. So, trading should be safe and with low volumes.
Q: What are the stocks that investors could go short on for next week?
A: There are a lot of midcap stocks where the bear market rallies have come to an end.
Gujarat State Petronet Ltd (GSPL) had a very small rally and is already in a downtrend after broke down from a rising trendline. The stocks is also starting to seek new lows. It is a relatively safe bet because the trend is down.
Investors can also short the Power Finance Corporation (PFC) which along with the Rural Electrification Corporation (REC) has disappointed. Both stocks should have rallied but did not. With a bang, all the banks have started to plummet and drag PFC further down.
Q: Do you have any contrarian 'buy' calls in any individual stocks for next week?
A: Choppy markets offer buying opportunities. Ideally, investors should buy stocks at support levels. Exide Industries is one such stock. It rallied and came to a support of Rs 130-131 and is now starting to rally again.
Another buying opportunity is Adani Enterprises. The stock is building a base after a huge decline and this should bring the stock back to support levels. Adani Enterprises is at a support level and is now beginning to rally again.
Traders must understand that these buys could go wrong if the market suddenly takes a turn for the worse. So, short-term trades should keep a stop loss for this trade.