SENSEX NIFTY
Aug 08, 2013, 11.08 AM IST | Source: CNBC-TV18

Don't play relief rally to build longs; stay short: Sukhani

Market likely to be choppy, any rally should be sold into. Those who do not have short positions, use the rallies to build short positions, technical analyst, Sudarshan Sukhani, s2analytics.com said.

In an interview to CNBC-TV18, Sudarshan Sukhani, s2analytics.com shared his reading and outlook on market and specific stocks.

Also Read: Cues that will decide Nifty's course today

Below is the verbatim transcript of Sukhani's interview with CNBC-TV18.

Q: Yesterday was a choppy day but we still ended in the red. What is the view for today?

A: This is a strongly trending market. We are trending on the downside. Once we have a strong trend, intraday trades become difficult to take because a lot of the movement comes on gaps. Therefore, the view remains that this is a strong trend, we are going to break; we have virtually broken 5,550 level but we are going to break it decisively. So, that is a qualitative adjustment. We will break it; we are moving towards 5,000-4,900; difficult to say when.

In this environment the trade is to be on the short side. I would not even venture to take a relief rally, intraday. It is possible that we may get one today. It could come any day. If that happens, we step aside because the first relief rally is going to be treacherous. If a correction starts on the upside, a sustained upmove of 100-200 points then maybe part of it would be tradable. However, for today market is likely to be choppy, any rally will be sold into. That is what I would do. Those who still do not have short positions, use the rallies to build those short positions. Now buy September Puts.

Q: What kind of targets do you see for Tata Consultancy Services (TCS) in this correction?

A: TCS has just begun a journey and that is surprising because it was as if TCS can do not wrong and we have had buy signals in TCS repeatedly. That seems to have come to a conclusion. It is now clearly and visibly overextended. Overextended stocks will come down and TCS has started the journey yesterday and it likely to persist. An immediate day trading short-term target is Rs 1,650, but that is only today’s target or maybe for a couple of days. I would assume that a slide towards Rs 1,500 is very likely. This is the first of the IT stocks that will crack because the virtual vertical rally cannot be sustained and a similar decline is coming.

Q: How would you trade Dish TV , which has been a disappointment for last many quarters?

A: Sell it. It was a big disappointment. The chart suggested that a strong rally below Rs 70 has started cracking and we went bearish on it. At Rs 48-46, Dish TV has not completed its downtrend. Eventually it will go below Rs 40. However, at this point day traders, short-term traders should look at Rs 44 as a modest target, but that is only a stopping point. It has broken all kind of supports, very bearish pattern.

Disclosure: Sudarshan Sukhani has no holdings in the stocks discussed.

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