Don't go short, buy BoB, take position in Cummins: Sukhani

In an interview to CNBC-TV18, Sudarshan Sukhani of s2analytics.com says, the Nifty is finding support at 4,750-4,800 repeatedly.

According to him, the trend is neutral, but the bias is on the long side. He advises investors to avoid going short.  "My view is that we should try to buy a breakout of the first 15-20 minutes of trade and avoid going short," he adds.

Also read: Sensex gains capped at 5% for rest of 2012, says Emkay Global

Below is the edited transcript of his interview with CNBC-TV18's Mitali Mukherjee and Sonia Shenoy. Also watch the accompanying video.

Q: Would you play that likely continuation of the pullback? Do you think there is a bit more to go?

A: I would think so. We have been finding repeated support at the 4,780-4,800 level. That is happening not just to us, but also to the S&P 500 and most of the other markets. The short-term trend is neutral, but the bias is on the long side. So, today atleast my view is that we should try to buy a breakout of the first 15-20 minutes of trade and avoid going short.

Q: You would choose to buy Bank of Baroda for the morning, right?

A: All said and done, banks and Nifty are in a trading range. So, the trades that we are discussing should not be taken as beginning of a new bull market. It’s not that. I just want to give that caveat. But within the circumstances, banks appear to be ready for some small upmove. Bank of Baroda has been one of the earlier outperformers. Yesterday’s price action suggests there is more upside here. So, I would be a buyer in Bank of Baroda.

Q: On the downside, do you see more to go for Hindustan Unilever (HUL), the stock that has been under pressure for a while?

A: Yes, there is more downside here. There is a theme building up that all the expensive fast moving consumer goods (FMCG) and pharmaceutical stocks are beginning to show distribution pattern. It’s not just HUL. Hindustan Unilever’s downside is there towards Rs 400 or even Rs 395 and that can happen even if the Nifty goes up today. 

Q: Do you see a bit of bounce coming in auto names like Hero MotoCorp ?

A: I think so. Hero MotoCorp has fallen almost Rs 400-500 points and is now finding support at the Rs 1,800 zone. It’s probably a correction rather than a bear market for Hero MotoCorp. If that is so then any rally should see it contributing more than the other auto stocks. The others are probably best avoided, but Hero MotoCorp is a buying opportunity. Yesterday, it showed some signs of life and that could easily continue if the Nifty were to move up today.

Q: Cummins India is also in your buy list today, right?

A: The buys are overweighing the sells today because the market is inching upward. Cummins India is a stock that has been little indifferent. It had some good prospects and then big declines were also seen. After that, Cummins is a buying opportunity. It’s not just for today. My sense is that it’s turning around and it’s probably going to outperform in the near future. So, for position traders also it’s a good idea. 

Q: You have a sell on Aban Offshore and that had an extremely rough time in the past many months.

A: Yes, extremely rough. Earlier the share was Rs 3,000-5,000, no splits, no bonus and still it doesn’t show signs of exhausting the downtrend. It’s a pity. But here is a short sell that can be taken even if the broad markets are cheerful today. I wonder sometimes how low can Aban Offshore go, but it keeps on going low.     

Q: You have a buy call on NTPC for this morning, right?

A: Yes. NTPC was in my buy list earlier. I think NTPC is bottoming out and for somebody who wants to make an investment in the equity market NTPC is an ideal choice. This is not an investing idea that we are discussing. But aside of that, it’s a good idea to buy NTPC and hold it for a year or two years. The short-term chart pattern suggests that NTPC’s breakout has taken place on the upside and one should see more room for its upmove. It’s a good buying opportunity and probably very low risk.