The Indian market has been very volatile over this week. The Sensex closed at 19,453.92, down 22.08 points on Thursday. The Nifty closed at 5,916.40, down 13.20 points.
In an interview to CNBC-TV18, technical analyst Sudarshan Sukhani of s2analytics.com says the market is still in a trading range.
According to him, the Nifty is no longer tradable. "We are just sloshing around in 70-point range. That’s no longer tradable. We will wait for 5,850 to taken out and if that happens then that is certainly a shorting opportunity. Otherwise, it’s better to focus on independent individual stocks, wherever there is opportunity," he asserts.
Below is the edited transcript of his interview on CNBC-TV18
Q: We have got a slightly weak global set-up, would you look to short the Nifty, if you see signs of weakness?
A: Not really, because inspite of global set-up, inspite of the fact that Dow Futures at some time were 250 points lower, our market is still in a trading range. The SGX suggests that the Nifty will still remain within the boundaries of 5,850 and 5,920-5,930. So, we are where we are.
We are just sloshing around in 70-point range. That’s no longer tradable. We will wait for 5,850 to taken out and if that happens then that is certainly a shorting opportunity. Otherwise, it’s better to focus on independent individual stocks, wherever there is opportunity.
Q: Do you have Raymond on the sell side?
A: Raymond is a good short sell. We will get opportunities on the short side in a choppy market. Raymond has seen a very dramatic rally. That rally has topped out with a pattern that is a descending triangle. It is also giving a suggestion that a deep correction is in the offing. So, Raymond is something that is traded in the Futures segment, it is fairly active, liquid and one can sell it or even try to use Options there.
Q: Is Titan Industries also on your sell list?
A: Titan Industries was there in our sell list earlier as well. It is almost similar to Raymond, a small bearish pattern, at the top of a sharp rally. Titan is telling us that the bearish pattern was confirmed. We had sold it earlier and that sell continues. It is now giving us patterns that are continuing on the downside, so much lower levels are likely.
Q: You have an optimistic call on Havells India?
A: Yes because Havells has already done its bit on the downside. It had a very severe correction. That severe correction is now leading to a consolidation, a breakout on the upside and higher highs-higher lows. It is a classic uptrend.
The market is choppy, so the rewards for long and short positions are uncertain but the trend is clear for Havells and it is on the upside. We want to go long in it. In a choppy market, whichever direction the stocks are taking, does give some leeway and maybe Havells will work out. The charts are very nice for the buyer.
Q: You have a short call on NTPC today?
A: NTPC was falling and then we saw a small rally for three-four-five days. That rally didn’t work out; it was a bearish flag in an ongoing downtrend. It has fallen down from that flag pattern. This suggests that the flag normally gets made halfway in a trend. It tells us much lower levels are likely in NTPC and that is not surprising because the charts are fairly weak.
Today, we are looking to go short in NTPC and if it works, if the close is lower than our short selling price, we will carry that position.
Q: Is DLF coming back on the buying radar?
A: It is because after a bounce back it consolidated and then it broke out on the upside over the consolidation. So the context needs to be understood. As long as the Nifty remains in that trading range, we will get buying opportunities.
The rally in real estate is not over. DLF is a buying opportunity on any dip or even if it sustains at current levels.
Q: Cipla is also a buy today?
A: Cipla has been a dream of a stock, we got in at Rs 330 and it has been moving up consistently. It has now made new highs for this upmove. It is a buying opportunity.
Pharmaceutical is an outperforming sector and likely to remain so. Cipla is a positional buy and not just a day trade or a swing trade. The chances are that higher levels are in the offing, so even if people are looking at buying equities, Cipla is a good idea.
Q: What is your strategy on the Nifty?
A: Before talking on the Nifty, I would like to talk about two trending instruments; one is the US dollar and second is silver.
On Friday evening, I had said that the dollar is now breaking out, so we should be long. That trade is still alive, so it is not necessary to trade the Nifty. We should be long in the US dollar versus the rupee. The immediate target is 56 and eventually 57. Second, silver, which fell by about Rs 3,000 and it is moving much lower.
The Nifty is still in a no trade zone. It is true that it has fallen 30 points but it is still inside that trading range. In that 70-point range it is going up and down. It is best to stay away from it.
Q: What have you made of Ambuja Cement’s move in the last few days?
A: Ambuja Cement and ACC are topping out and giving the impression that a correction is coming because these are strong trends from which they are topping out. It is not an immediate decline but the trade here, is to sell it. People who are uncomfortable selling a strong sector, do not buy it but short sellers can be rewarded.
Q: Your view on Reliance Capital?
A: Technically, it is a buy but one of the advantages of being a trader is that we do not have to buy it. Reliance Capital has been falling for the last two days. It is giving first signs of exhaustion. So maybe it is in an uptrend but we would like to wait and see whether the uptrend is sustained or whether a deep correction is coming. It is ideally avoid.
Q: What about Aurobindo Pharma’s chart?
A: It is an excellent chart. It has been in a trading range after a big sustained rally, which is normal because stocks will consolidate. It is now willing to breakout of that range and that will take it to new highs for this uptrend.
Aurobindo Pharma is a good stock to be in. The current prices justify buying for a position trader.
Q: Technically what is your view on Bharat Petroleum Corporation (BPCL)?
A: It is a sell. Both Hindustan Petroleum Corporation (HPCL) and BPCL have been sells for a long time. There is nothing in it. The trend is that it is a small bear rally, which has completed itself and is falling.
Q: How about IVRCL from the infrastructure basket?
A: IVRCL went up yesterday, but that is not a good reason to buy it. The short-term trend is up on the charts. So if somebody wants to take a position here, they have to go long in it. I would not buy infrastructure stocks in general.
Q: What about Amtek Auto?
A: Amtek Auto after a big bear market rallied yesterday. That rally was good enough to justify a short-term buying position. But for all we know these cash stocks sometimes turnaround in a V-shaped rally, so it is worthwhile taking a trade on the long side. You have to buy the equity and then if it doesn’t work out there is always a stop loss but it could work out. The risk is worth taking.
Disclosure: I have no holdings in the stocks discussed.