The Indian market has been on a strong wicket now. The global cues are positive as well.
In an interview to CNBC-TV18, Sudarshan Sukhani of s2analytics.com says the bias for the short-term trader is clearly on the long side. "We should be bullish. Look to buy the Nifty as well as the bluechips, whenever there is a dip. Stay only with the blue-chips. This is not a momentum midcap market," he adds.
Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Sonia Shenoy.
Q: Would you continue to hold your long positions? What would the next port of resistance be now?
A: I would continue to hold my long positions and also look to add to them or maybe even trade on the long side intraday. That means maintain a positional view and keep on entering and exiting only on the long side.
The Nifty has made these higher lows, 4,800 in May and 5,000 in the last week of July and 5,210 last week. So, we have a clear pattern of higher lows. The higher highs are not as visible. We haven’t crossed 5,600, but who knows that may or may not happen.
The bias for the short-term trader is very clearly on the long side, it’s upbeat. So, we should be bullish. Look to buy the Nifty as well as the bluechips, whenever there is a dip. Stay only with the blue-chips. This is not a momentum midcap market.
Q: You have a buy on Apollo Tyres?
A: Apollo Tyres has been on a roll. It broke out of that Rs 78-79 resistance. It has come in the buy list earlier also. It is now willing to breakout to new highs. That’s always good news for a stock. A stock that is in an uptrend, consolidates and then breaks out to new highs - is a stock we want to buy.
So, today it is quite possible that markets may remain choppy. But within this choppiness, Apollo Tyres, the moment it shows us small dip or a sign of crossing Rs 93-94, we should be buying it.
Q: You have a buy on Dr Reddy's Laboratories today?
A: The interesting thing about Dr Reddy’s is that the big move in Dr Reddy’s came on Saturday. So, clearly Saturday trading did give some indications of what's going on. Dr Reddy’s is now in an uncharted territory. We want to be long here.
Pharma stocks are going places. We have already seen what they are doing. We don’t challenge the wisdom of the market. Just search for an intraday entry opportunity. Perhaps the first 15-20 minutes and then say okay, Dr. Reddy’s is crossing that 20 minute high, I am going long.
Q: You also have a buy on Biocon again?
A: Yes, Biocon again has been in the buy list. The stock went down, corrected, made a base and rallied. This is exactly what a good stock should do. It continues the rally. We don’t challenge the levels and say this is it and no more. In a market which is awarding relative strength, which is rewarding outperformers, Biocon is one.
So, same sector and the sector is flying anyway. It is a very good stock to go and buy in. In fact, this is a time when traders could consider actually carrying forward positions also if these positions are closing in their favour. I would assume that a lot of gaps could come in on the side of the bulls.
Q: Where is the base for Adani Power?
A: There is no base for Adani Power. It is just falling. So, we go and short it. Assuming that markets remain choppy, there will be selling opportunities and Adani Power qualifies as one of them. There is nothing there, it is just falling. I assume the declines will continue.
Q: You are bearish on Indian Hotels as well today?
A: Yes and that is mainly because I did not want to suddenly turn overly bullish and have a lot of stocks in my buy list. Indian Hotels has been an underperformer. It is doing all the wrong things. In a market that’s rallying for the last two days or three days now including Saturday, it has not done anything, it is actually falling.
So, there is a short sell here. Adani Power is a much better short sell I would think but for people who want to do some hedging, do some intraday trading only on the short side, Indian Hotels qualifies as a sell.
Q: You have a buy on Infosys from IT?
A: Infosys did nice things on Saturday. So, even on a day when volumes should have been low it opened up with a gap and stayed there. Infosys has now filled the gap that was created on the back of bad results, it is completed filled and it has now come back to the Rs 2,500-2,600 strong resistance area.
The chances are that IT is an outperformer and there will be repeated attempts to cross this resistance. Every time that thrust comes, intraday traders can get money out of it.
Disclosure: I have no personal holding in the stocks discussed.
Q: If there is some consolidation which happens now, what kind of a band would you expect that consolidation to happen in?
A: Well I would expect it to stay above 5300. So, may be somewhere between 5320 and 5370 - that 50 point band could be used for markets consolidation. The trade here is, if the markets open where the pre-open suggests, traders can still go long.
I think we’ll have a choppy market today, there will be dips. Again these dips should be utilized to build up long positions.
Q: What kind of target would you have on Infosys?
A: Infosys target is somewhere around Rs 2,700, it closed the gap, it is now ready to cross that Rs 2,500-2,600 resistance and the first stop then should be Rs 2,700.
Q: Do you see sub Rs 200 levels in BHEL?
A: Yes that’s right, it is not participating. The charts are very poor. Now, the point is that the trader need not actually go and short it because most of the trades are on the long side but it is a shorting opportunity.
Q: Where would Cipla move after the big move on Saturday?
A: I see it cross Rs 400. We have been tracking Cipla, giving it in our buy list repeatedly. It is part of that fantastic pharma sector but not necessarily today which means that there is no rush to buy it. It had a very big move, the chances are it will consolidate, that’s the time to enter it.
Q: Is the worst over for Jaiprakash Associates you think?
A: The charts suggest that some kind of minor support has emerged. It is too minor to be significant in the longer term. But we are playing momentum currently and in JP Associates, the trade is, just assume that the support is holding and try to go long. Again, there are other sectors IT, pharma and most of the other blue-chips which are far better than JP Associates.
Q: How would you approach Aurobindo Pharma?
A: I would buy it. It has done the right things. We have started tracking it and putting it into the buy list when it crossed Rs 113, it is now nearing Rs 130. It is going to go much higher.
Q: Do you think there is more in fertilizer names like RCF?
A: I wouldn’t buy it. Sometimes we look at a chart and say may be this chart is bullish. So, that’s the answer for RCF. But as a trader, I have the choice of going for a stock and not going for a stock. RCF is not a favourite. PSU fertilizer stocks keep on doing this kind of drama all the time.
Q: CLSA had upgraded Reliance to outperform with a target of Rs 850. What's your target on the stock?
A: I think it was Rs 850 earlier before it pushed and traced almost completely. It is Rs 850 again because Reliance, whatever retracement it has done is done and now it is coming back into play and the targets of Rs 850 on a technical level also exist.
Q: We were talking about JSPL earlier, where do you see the support on this one?
A: There is no support. We have been bearish on JSPL from Rs 800-750 downwards and we have not given a buy in it. The charts have been breaking down consistently. No one should try and attempt to buy because it is like catching falling knives, don’t attempt it also.