The market seems to be unwilling to let go of its downward slide, and therefore Sudarshan Sukhani of s2analystics.com says there is no sense in going long on the market.
“The market needs to give strong signals that its downtrend is over before long positions can be taken,” he explained in an interview to CNBC-TV18.
In this scenario, Sukhani’s advice is to keep trades on the short side. “The view for an intraday trader today is to take short positions on a rally or when any intraday consolidation breaks down,” he said.
Below is an edited transcript of his interview with Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.
Q: We have gotten into a much smaller range for the Nifty. How would you approach trade on intraday basis?
A: The trade remains on the short side. It’s a small range, but that’s how the market behaves; sometimes it expands, sometimes it moves in a contraction phase. But in this case, whether it’s expansion or contraction, the market was continuously sliding down and that is being maintained.
So the view for an intraday trader today is to take short positions on a rally or when any intraday consolidation breaks down. There is no sense in trying to go long. This market needs to give a lot of messages that it’s done with the decline and only then can a long position be taken. We are still sliding and going down.
Q: Pantaloon Retail is out with results today but you have got a sell there?
A: Yes it is a sell because Pantaloon has been breaking its earlier support levels. The earliest it can stop is Rs 140, which is my immediate target. I won’t worry about the results this time because we have seen what results are doing to companies which perform even slightly lower. Pantaloon’s first target is Rs 140 and I assume that it would be met. If Rs 140 is broken then it’s the freefall and my sense is that we are moving towards Rs 110, no matter what happens on news basis.
Q: IndusInd Bank is also a bearish call?
A: It’s a bearish call but it’s not in the same league as Pantaloon. IndusInd Bank has now started an intermediate decline but that’s normal. It had a big rally, we are seeing a decline. Yesterday we saw a narrow range day. When the trend is down the narrow range days, resolve themselves on the downside. So there is some momentum likely in IndusInd on the downside. There is Rs 10-15 possibility of a downside target. So at Rs 300 the trader could easily cover his short positions. There is some momentum on the downside and that’s all. This must be target based.
Q: Alstom T&D India also in your sell list today?
A: Alstom T&D India is in a freefall, from Rs 200 it has come down to Rs 140 and it’s not going to stop. The targets for Alstom are Rs 130. It’s made new lows yesterday, and new lows are generally bearish. But with the Nifty itself pushing on the downside, the chances are we will see some follow through and a slide to the targets I mentioned, which are probably easy to come by. That may not be the end of decline.
Q: Is the buy call on BPCL because of crude or do you see inherent strength in the chart itself?
A: It’s because of chart although the chart may have been developed or created because of crude but the strength is in the chart. BPCL made new highs yesterday, and new highs are upbeat. Not only that it also was in a trading range between Rs 645 and Rs 680 and it crossed that range quite decisively.
We want to buy it because that’s probably one of the few sectors that are doing well in this market. Even IOC was a buying opportunity earlier. I think at least for day traders they should search for an upside momentum in BPCL and trying to catch whatever they can on the long side.
Q: BGR Energy Systems is also in your sell list today?
A: BGR Energy started falling from Rs 370. It has reached Rs 280. It’s not stopping, it’s broken all support levels and the chances are that it’s sliding much lower. It is difficult for me to say what is going on in all of these midcaps but we can see a broad underlying theme. Concept stocks are being battered; they were being pushed up and in the same form we are now seeing the declines coming in.
BGR Energy at this point looks probably much lower so there is a short sell here and traders should use a stop loss because it’s fallen a lot and I do not see it rebounding at all.
Q: You have a buy on TCS?
A: It is one of the few stocks that are doing all the right things. TCS was also in a narrow range yesterday but because the trend is up, it is quite possible that during the day somewhere it could actually break out and move above yesterday’s highs.
Q: If you are running with your shorts still, where you would keep a stop loss on a positional trade and on a short-term day trade?
A: The positional trade stops are at 5,050 and that is very wide but we need to give a lot of room for this downtrend to play itself. For anyone who is trading intraday, a close below 4,920 would tell us that the short-term trend is probably changing on the upward. This is not intraday violations of that level because we are seeing a lot of volatility. The market must close above it.
Q: Your view on Cairn India?
A: Cairn’s downtrend was something I have been talking about, we are now at Rs 300, the targets for this are Rs 280-270 but the targets are so close that I don’t think Cairn should now be short sold at least not on an overnight basis. Trading in Cairn should still be on the short side. Only for intraday traders, take whatever you get and don’t take overnight risk anymore. The trend is down and go short for intraday.
Q: How about Bank of Baroda?
A: Bank of Baroda was a disaster. It not only broke down from Rs 770 support level but it fell so rapidly that it completed its target at Rs 605. At this point, I cannot say that one can go and buy it. It can come to Rs 550 or anywhere it likes. So the trend is down but I would rather not go short in Bank of Baroda because there are probably other opportunities.
Q: What about Ashok Leyland which disappointed with numbers, what is the chart saying?
A: The chart is saying that the Rs 25 support is unlikely to hold, yesterday’s decline is likely to see follow through today, tomorrow. We are looking at Rs 23 as the downside target. Even the long-term charts for Ashok Leyland have become horrible.
Q: Any thoughts on Orchid Chemical?
A: I would assume that the downtrend will continue. If there is a snap back today then the assumption of the downtrend could be postponed to midday or tomorrow. Rs 120 is the downside target. Eventually the way Orchid is behaving, it should come into double digits.
Q: Technically how is Arvind looking?
A: Arvind is a relatively better stock but that doesn’t mean we buy it, it is still a short sell. It is not likely to collapse the way Ashok Leyland, Orchid or others are suggesting. So a downside target is Rs 65, which is also where lot of support will come in. There is a short sell here but one must be careful.
Q: Your view on GMR Infra?
A: GMR is down from Rs 33 to Rs 18 and an immediate target is Rs 16. I am quite confident it will come to single digits.