May 16, 2012, 10.58 AM | Source: CNBC-TV18
Sudarshan Sukhani of s2analytics.com tells CNBC-TV18 that traders should start building short positions again because the downtrend is back.
Sudarshan Sukhani (more)
Technical Analyst, s2analytics.com | Capital Expertise: Equity - Technical
Indian benchmarks snapped a five day losing streak yesterday to end 0.5% higher. However, adverse news from around the globe this morning could put pressure on the indices again.
In this scenario, Sukhani advices traders to build on short positions during intraday rallies. “Today’s declines are not an opportunity to cover shorts,” he added.
If the market opens with a gap down today, Sukhani believes the Nifty will race towards the 4800 level or lower.
Below is an edited transcript of his interview with Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.
Q: Indications are that we have got a sharp cut coming this morning. How would you approach it as a trader? Is there any opportunity for a bounce back or is the range for the market opening up again?
A: You described it nicely; the range is opening up again. The bounce back has already come. The first day was mild and yesterday we had a decent bounce back, so we are done with that bounce back.
Now, the original trend, which is the downtrend is asserting itself. Today’s declines are not an opportunity to cover shorts. I would say that intraday rallies should be used to build more short positions. Nothing is certain in the market, but a gap down is a sign that we are now racing towards 4,800 or lower.
Q: Exide Industries is in your sell list?
A: Exide has been a big disappointment. It was one of those concept stocks. It’s been falling consistently from Rs 150, its not having any up day. The Rs 120 has also breached. It now seems that Exide like other midcap peers is going to into double digit. At this point the target of Rs 112-110 seems visible. I think today should be used to build-up short positions. Exide qualifies nicely in that area.
Q: Aditya Birla Nuvo is a chart that you do not like?
A: I do not like it because it was a good stock and it made money on the long side. It is cracking now. I have discussed this before that so many midcap stocks were standing at support levels and they have cracked below it. There is a message here. Aditya Birla Nuvo is now cracking. There is a modest downside target of Rs 770. I would not be overly bearish on it but for day traders ,even this is good enough.
Q: How would you trade Cipla ?
A: Cipla is a buy. It is a very good chart, its a bullish pattern and it’s breaking out. I think the breakouts are getting tempered because the broad market is not helping but even assuming that we open 60 points lower, go down, any dip in Cipla should be use to accumulate, add and initiate long positions. This is a positional trade.
Q: Tata Motors (DVR) is a buy today?
A: Apart from whatever is going on fundamentally, the DVR chart suggests that Rs 148-149, it came to a strong support level and from there it saw a bounce. I would be a buyer in Tata Motors'differential voting rights (DVR) even if it falls below Rs 148 today because that is a strong support. This is a buy on dip stock.
Q: Gujarat Mineral Development Corporation (GMDC) is a sell in your book today?
A: The stock cracked below Rs 175 support. All the significant support levels in midcap stocks have been broken on the downside. The targets are so low that we cannot discuss. An immediate target of Rs 158-155 is visible and that is good enough for short-term traders and for swing traders. GMDC’s targets are Rs 110 after the breakdown.
Q: You have got a bullish recommendation on Alstom Projects ?
A: Yes, because everything is so bearish that one starts searching for something better. Alstom Projects has a support level at Rs 340. This one hasn’t broken unlike most of the others as we discussed, so I am just hoping that the support will hold. This is not a stock that one should rush on a down day like this. But if the support is holding then we will be buying at the lows. One has to wait till the close to find its holding.