SENSEX NIFTY
Mar 09, 2013, 02.24 PM IST | Source: CNBC-TV18

Avoid blue chips, focus on midcaps next week: Sukhani

Market uptrend is likely to continue and for the coming trading week, traders should focus on midcap stocks rather than largecaps, says technical analyst Sudarshan Sukhani of s2analytics.com.

Key equity indices ended 4 percent up end of last week and all sectors barring consumer durables ended in the positive.

Market uptrend is likely to continue and for the coming trading week, traders should focus on midcap stocks rather than largecaps, says technical analyst Sudarshan Sukhani of s2analytics.com.

"We might see a choppy market, so the key is to wait patiently for corrections and intraday dips and then go long," he cautions.

Sukhani is upbeat on midcap stocks like Indraprastha Gas (IGL), Apollo Tyres and Tata Global Beverage , but recommends short selling Steel Authority of India (SAIL).

Also read: Current rally in indices may not sustain, says Tandon

Below is the verbatim transcript of his interview on CNBC-TV18

Q: You advocated taking long positions all of last week but after taking profits and the heady run that we have seen, would you turn a bit cautious as we head into next week?

A: I would be very cautious and caution does not mean that the uptrend is coming to an end. It is too early to say that and the chances are it is not coming to an end but the easy money has now been made. So, the caution is that we should not go overboard by buying on breakouts, by buying stocks that have already flown away. The key here is to wait patiently for corrections and intraday dips and then go long.

Ideally this week we do not want to trade in the blue chips i.e the largecap stocks because the index could get choppy in a day or two. So, the focus should remain on midcaps.

Q: You like Indraprastha Gas (IGL). Tell us about that stock and you said it would be a lucrative opportunity to buy midcaps. What are the other midcaps that you would advocate a buy on?

A: We are looking at midcaps and IGL seems to have completed a correction and a consolidation. It now is coming out of Rs 270, which was a price barrier for this stock. That price barrier has been broken and the resistance seems to have been taken out.

When we look at midcaps, we see stocks that are ready and have an imminent breakout or imminent upmove in the coming week. IGL qualifies on that accounts, so that is a buying opportunity.

Since the market is in a short-term uptrend, the thrust should be on buying. The second stock that one should look at is Apollo Tyres. Apollo is another midcap stock, which has completed a very long consolidation. It used to go up and come down and simply remain in tight range. That range is breaking on the upside.

Once a range breakout takes place and that too a large range breakout then the stock starts rallying, and sometimes takes wings. I do not know whether Apollo will take wing this week but it is good to be in the stock. Hopefully, it will see a strong rally.

We have an old favourite, which has come back into news and into our charts, that is Tata Global Beverages. It had a deep correction; it almost fell like a bear market but that is over. It is a wonderful midcap stock. It is completing its correction, building a base, and has made a bullish head and shoulder pattern.

It has broken out of that pattern and when a stock breaks out of a bullish pattern, it suggests that a new upmove is coming and probably a sustained upmove.

SAIL is a short sell idea. It seems to be weakening day by day. It is making new lows. So, SAIL is a sell irrespective of where the market goes.

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