May 25, 2012, 10.37 AM IST | Source: CNBC-TV18

Buy on dips, sell on rallies today: Sukhani

Sudarshan Sukhani of s2analytics.com expects Nifty to take out 4800 on the downside on close and then sustain 4,950 on the upside. One should wait for dips to buy, rallies to sell with small volumes today, he suggests.

The relief rally seen on Dalal Street on Thrusday was due to the trading range the market is currently in, said Sudarshan Sukhani of s2analytics.com. "Trading ranges have this tendency of creating optimism and pessimism and sometimes they do it in alternate days," he told CNBC-TV18.

He expects Nifty to take out 4800 on the downside on close and sustain there or 4,950 on the upside. One should wait for dips to buy, rallies to sell with small volumes today, suggests Sukhani.

Below is the edited transcript of Sukhani’s interview with CNBC-TV18. Also watch the accompanying video.

Q: The mood was good yesterday; do you think that was short-lived?

A: No it has to be because we are in a trading range. Trading ranges have this tendency of creating optimism and pessimism and sometimes they do it in alternate days. So, in any case it is important to remember the boundaries.

As far as those boundaries are held, this will happen. Some days will be good and we will be cheerful, some days will be on the downside. It is going to go on. Remember 4,800 on the downside must be taken out on a closing basis and then sustain or 4,950 on the upside. Otherwise today we’ll just wait for dips to buy, rallies to sell with small volumes.

Q: You have chosen Axis Bank today?

A: Yes, but among the longs that I am looking at to buy. Axis Bank is the least favourite for the reason that it’s not build any kind of base, it just did a small V-shaped rally because banks suddenly turned up. But amongst other banks like ICICI Bank and State Bank of India Axis Bank has the potential of giving better returns on the day trade, so there is a case for buying here. If the bank index doesn’t start to rally then traders can not take this trade. But if it does then among the banks Axis would be more suitable for the day.

Q: You have a buy on Dr. Reddy’s Laboratories as well this morning?

A: Dr. Reddy’s Laboratories is a far better chart. It went through a correction. It came to Rs 1,620-1,630 where lot of support exists. A stock that is in an uptrend comes down to a level where support exists and then starts bouncing back which is what it did yesterday after staying at that support level and tells that new highs in Dr. Reddy’s Laboratories may not be unusual. This is a better chart to go long in. the difference is that it is not necessarily a day trade because the stock itself is not an active mover everyday but there will be gaps in favour. This is a low risk buying opportunity.  

Q: Sun TV Network is in your sell list?

A: I thought Sun TV is finishing its bear market and going to a new uptrend but that hasn’t worked out. It crashed below Rs 300 and it’s now promising much lower lows. At this point I would be short in Sun TV. It’s broken all support levels. So Rs 240 is an immediate target but the promise is that this decline immense, waterfall decline that one is seeing and should take it below Rs 200. 

Q: Similar theory for Opto Circuit as well??

A: Yes, Opto Circuit had come in our shortlist earlier also. Yesterday it made new lows, just as new highs should be bought, new highs should be sold unless there is exceptional reason. This is a short sell. The chart suggests that it’s going towards double digits so probably there is money on the short side. We should see follow-through today also and probably to hold it.

Q: Chambal Fertilisers and Chemicals looking bullish on the chart?

A: Chambal Fertilisers’ chart is slightly bullish. It made higher lows, which is the first sign of a stock that willing to go up. Chambal is prone to these moves of Rs 15-20 on the upside and downside because it is at its lower range and making some bullish patterns so it could go Rs 15 up and that’s a handsome 20% on it. Chambal seems to be a buying opportunity. Today one could see a breakout, one could see some gains being build on yesterday and for position traders with a proper stop loss which is there, they could get in; maybe they will get 10%.

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