In an interview to CNBC-TV18, Sudarshan Sukhani of s2analytics.com shared his reading and outlook on market and specific stocks.
Below is the verbatim transcript of an interview aired on CNBC-TV18.
Q: Difficult couple of days for the index, as a Nifty trader, what should the approach be?
A: Last two days we have been talking about going short in the morning, selling into strength and that has worked out. We have not carried positions because the markets were still indecisive. Today, given what the markets are doing all over the world, the SGX is suggesting our charts have already fallen below 6,000; the last level of 5,980 is likely to be taken out. So, positions should now be taken on the short side. One has to understand that the market can turnaround on a dime. It seems very unlikely. However, the possibility exists. The short-term trend was down and it is getting confirmed. The intermediate trend is on the verge of moving to the downside. Therefore, the trade now is to go short and if the market remain below 6,000, carry the short forward. So, essentially we are now creating a positional short.
Q: Are you getting back to the defensive because you were quite bearish on Titan Industries earlier. You started gravitating back to those kinds of names?
A: Yes. It is not for me to decide. The charts have started suggesting that defensives are now beginning to perk up and see buying opportunity. So, that is the broad market and not just me.
Titan is now a buying opportunity. The big decline in Titan is over. A small range was a double bottom. That double bottom was confirmed and a breakout has occurred. The problem here is that if the broad market, if the Nifty is going to go down, open lower and persist in a downtrend then buying should be done only when one feel that the stock is not going down. This is not easy to do but when one is doing short-term trading, it is a good advice. So, traders should be alert. Here is a buying opportunity. We will go once we see outperformance in the stock.
Q: Pantaloon Retail is a sell this morning?
A: Yes. Pantaloon’s uptrend is intact but even inside an uptrend one will see deep corrections and this market is providing the opportunity for many of these momentum stocks to go through dip corrections on the downside. So, Pantaloon’s breakdown from a strong support level suggests there is much more follow-through on the downside. In the morning any sign of a minor strength, sell Pantaloon in terms of Futures or even in terms of buying Puts or selling Calls. There are many opportunities. However, the trade here is on the downside. A decent profit is possible.
Disclosure: I have no holdings in the stocks discussed.
Q: Jaiprakash Power Ventures looks like a sell?
A: Yes. All the JP companies have changed their chart pattern. JP Power, which gave the impression of doing the right things, suddenly started falling. It was consolidating for the last ten days after a big decline from Rs 45 to Rs 35. That consolidation is now giving way to another breakdown. So, where will it go down to? That is a rhetorical question. The trade here is to sell because a small consolidation has simply broken down massively yesterday. It is looking much lower than one can imagine. Sell it. That applies to most of the infra stocks. All the momentum infrastructure stocks are now offering selling opportunities; just pick the easiest and the likeliest candidate for going, which could go down further.
Q: You have a short on Raymond?
A: Raymond was a short selling idea earlier also. The uptrend gave way to a correction and that correction started a big decline. Raymond has given up all the gains that it had notched up. It is worrying, the behaviour of a midcap stock. At the Investor Camp, I saw the sense is now developing that the market have matured and completed their upmove. Raymond is a short sell today and for somebody who is willing to carry positions, can carry the short selling for sometime.
Q: Rural Electrification Corporation’s numbers looked good yesterday but even the technical supports the upmove?
A: Rural Electrification Corporation is one of the few stocks where the correction has not gone back to the original starting point. All the stocks we discussed have corrected 100 percent on the rally, which means they have given up all the gains but not REC. REC’s correction was deep and then a handsome rally yesterday in a market that was going down. REC is a stock that traders should be focusing on. If not anything then the buying opportunity comes as a hedge to any short positions that they maintain. If the market gives the slightest sign of cheer then REC should be the first stock one should be considering. It is a nice chart on the upside.
Q: Your views on Wipro?
A: This is more a hope than a trading idea. Wipro has come down and stopped at Rs 400. It is unlikely that the IT stocks will do their own things. However, it is quite possible that IT stocks may still outperform. They may fall but fall less. Wipro is ideally suited for a strong rally if the Nifty starts a rally. So, look at the context. If the market are choppy, if we have intraday rally also then rather than buying Nifty, buy IT and buy Wipro, which is more suited for an upmove. So, an intraday swing could be caught with Wipro.
Q: What kind of immediate supports would you set out for the Nifty from beyond 5,950 regions?
A: The immediate support was at 5,980 and we were almost there yesterday. Now the Nifty can stop wherever it likes. The critical level for traders to take short positions and assume that the trend is down is 5,940. It is not support. It is the breakdown of 5,940; the last recorded low that suggests that trade should be done only on the short side. That could happen today. Support comes much-much lower, somewhere around 5,780-5,800. So, there is no support.
Q: If we do open with a gap down, would it be prudent idea to short there or would you wait for an intraday pullback in the morning to initiate any shorts?
A: There is a large gap that has been suggested. It is wise to wait for an intraday pullback. The problem with waiting is always twofold; one is that the pullback may never come and then the trader is left high and dry. However, today is expected to be the third day of declines and I would assume that some kind of pullback will occur whenever it does and that is the time when short positions should be taken.
Q: How do you approach Prestige Estate Projects?
A: Buy it. It has been in my buy list for real estate stocks for a long time. It is breaking out of decent consolidation, moving towards new highs. Real estate has been an upbeat sector as of now.
Q: How much lower do you see Shree Renuka Sugars going from here?
A: I would assume an immediate target of Rs 26 on the downside in the couple of days and then it is anybody’s call.
Q: Your thoughts on IDFC?
A: IDFC is a good chart. It has completed a distribution and so many midcaps have done that now. It has confirmed a bearish head and shoulder pattern and that suggests that lower levels are coming. An immediate target is Rs 150 and it could eventually end up at Rs 135 also. Still the underlying long-term bullishness of the stock will not be disturbed. However, for a short-term trader there is money on the downside, so should be selling.
Q: Is Essar Oil a better looking chart?
A: It is a nice looking chart. It requires certain amount of courage to buy. It’s a stock that has jumped from Rs 75 to Rs 103 in just three days. People who have that courage will get rewarded. It is a buying opportunity. I think will soften up today so it is worth taking into.
Q: What about Jubilant Foodworks?
A: It is a sell. It was a sell prior to yesterday’s big decline and it had already broken significant support levels. It had come in our sell list earlier and it continues. I would assume that an immediate target could be Rs 1,040-1,030 but eventually Rs 900 could be achievable.
Q: Do you expect more problems in Adani Power?
A: Yes. It confirmed a double top. A lot of these charts are now giving confirmed bearish patterns. So, wait patiently and then sell it. Any rally and we sell that.