Correction not over yet; extend short positions: Sukhani

Sudarshan Sukhani of s2analytics.com tells CNBC-TV18 that the Nifty has not yet completed its downmove, and that it will decisively crack 5200 soon. “The correction is not over, inspite of the 30-40 points rally which we are seeing in the SGX,” he said.

Therefore, his trade for today is to extend short positions or take up new ones during the day when rallies seem to fizzling out.

Below is an edited transcript of his interview with Udayan Mukherjee and Mitali Mukherjee.

Q: Would you agree that the market is looking range bound? What kind of a Nifty trade would you set out for the day?

A: I would not completely agree. We are drifting down, but we have broken from a narrow range. The Nifty fell below 5,200, so it is true that eventually a range will develop, but at this point we are expanding on the downside and that should continue. The correction is not over, inspite of the 30-40 points rally which we are seeing in the SGX. Sometimes the market will rally, but the broad thrust remains down.

Yesterday the suggestion was to stay on the short side and that is being repeated. It is not necessary to go and sell at the open. If I have short positions as, I have they, will be maintained and new positions would also be taken somewhere during the day when there is the sense that the intraday rally is getting exhausted. So my idea is that we have not completed the down move and I expect to see 5,200 crack sooner or later.

Q: You have chosen to short Polaris Financial Technology from IT list?

A: Yes. Yesterday I had explained that the Tata Consultancy Services TCS’s chart was looking bearish. It is cracking at Rs 1,200 and making an intermediate top. I do not know what will happen. I have some short positions there.

Polaris is my choice for today. It has made a bearish head and shoulder. It’s broken down. So there is much downside that is just beginning to happen. If one gets a rally then that will be a good location to sell it. Buy Puts because it is an actively traded counter in the F&O segment or just sell Futures but the trade here is that it’s going with the IT index and probably moving much lower.

Q: You have chosen Reliance Infrastructure on the short side today?

A: Reliance Infrastructure has a very dismal chart. It had a V-shaped rally. I am always suspicious of V-shaped rallies because there is no grounding there and there is nothing that the smart money is putting in. Suddenly operators, the so-called traders come and start pushing the stock up, which is exactly what, has happened with Reliance Infra.

Now for the last seven days it’s falling relentlessly day after day. It will fall much more before it finds support and then maybe one can say this rally is genuine but one doesn’t know, it is going to take some time. So, there is significant decline in the offing here. If the Nifty corrects more as I assume then Reliance Infra will be a big underperformer on the downside. So it will go down much more.