May 03, 2012, 10.38 AM | Source: CNBC-TV18

Expect Nifty to break 5200 and drift lower in May: Sukhani

The Nifty held on to the 5250-mark for the better part of Wednesday and closed at 5239.15 levels. In an interview to CNBC-TV18 Sudarshan Sukhani of said, the trend for the market for the month of May is on the downside.

The Nifty held on to the 5,250-mark for the better part of Wednesday and closed at 5,239 levels. In an interview to CNBC-TV18 Sudarshan Sukhani of said, the trend for the market for the month of May is on the downside.

He expects the Nifty to break 5,200 levels and drift lower. "The trend is downward, so I would suggests to short today," he added. 

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

Q: How are you approaching the index now and what seems like the best instrument to trade this range bound market?

A: My sense is that we are still moving on the downside. Yesterday we rallied in the morning and as I had suggested we kept on moving down after the rally that worked out simply because the trend is down. Therefore it is easier to suggest trades in the direction of the trend. What happens is probably we made a high yesterday at around 5,300 just a little shy of that and we are likely to break 5,200 and go lower. So, the trend for May so far remains down.

It is true we are in a trading range but the push is again on the downside. The gains maybe small or they may become larger later on, but I am approaching the day to take another short trade.

Q: Cipla did well yesterday; you would buy it after the run up?

A: Yes, Cipla has done well. Cipla is more in a trading range; it goes down, finds support just a little below Rs 300 and then rallies. Currently it is in a rally. So we want to go into the stock at least to the top of its trading range, which is about Rs 330-335 and we will still have the advantage. If it crosses Rs 335 then it breaks out of that range and that gives us more movement on the upside.
Cipla’s chart pattern suggests that it is bottoming out, it is probably willing to go higher. I think today Cipla should be on most people’s buy list because likely gains are going to come and fortunately it is not so affiliated with the index. It is a pharmaceutical company that has its own dynamics, so it should work well.

Q: You think HDFC Bank will be resilient; you would be a buyer there?

A: Yes, I would be a buyer there, more because the buying list is very small now. While short selling ideas are coming on the charts very quickly and there are number of them, so we have a choice as to when we want to go in a choppy market and we want the buys and sells to be balanced. At this point of time, the list of stocks showing chart patterns that I can use to buy is small and HDFC Bank comes in it.

So rather than saying I am expecting big gains in HDFC Bank, I am expecting that HDFC Bank will outperform the market. It is a stable security, so I would prefer to go long in it. In case the market does turnaround and go up, HDFC Bank should be an out performer even then.

Q: Your favourite on the short list has been Larsen & Toubro (L&T) and that remains so?

A: Yes, you are right, that remains. The stock is a disaster; it is falling, it is now at Rs 1,200, it promises to come to Rs 1,000 again. It did that when we were in a bear market and L&T is in a bear market no matter what the market does. But before any serious buying can take place, we have maybe a 20% decline here and for short sellers it is an excellent opportunity. One could take a positional trade here, not just for today. You could buy Puts for L&T and then just wait patiently. Together with BHEL, L&T is on the downside and the downside is likely to continue.

Q: Are you beginning to see any signs of a rebound on Titan’s charts -you are buying that today?

A: Yes I am buying Titan , it is a good chart. It made new highs on the back of news and then suddenly we thought people won’t buy gold jewellery etc. That was a dip, it was a decline. We want to buy good stocks on dips and Titan  perfectly qualifies for that. Yesterday, we saw decent gains those gains came after a narrow range and a breakout from that. This is a pattern that suggests new highs are coming.

So Titan is a buy, we can see follow through today. If suppose the markets start turning around during the day, Titan should be one of the biggest beneficiaries together with Cipla and HDFC Bank, so it is in my buy list. For people who want to make positions, buy Titan, hold on to it and you will see very decent gains even in a market that retreats.

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