Focus on banking sector, individual stocks today: Sukhani

In an interview to CNBC-TV18, Sudarshan Sukhani of s2analytics.com says it is far better today to focus on the banking sector and on individual stocks. "The market will consolidate, it will correct and then there will be many opportunities in the coming days to go and buy," he adds.

According to him, banks are bottoming out. "While the Nifty and the other components of the Nifty have seen significant rallies, the banks have started their show," he adds. 

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Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Sonia Shenoy.

Q: We may start at 52-week high today, close to 5,640-5,650. What would be a prudent course of action for the trader now?

A: For traders, who are long in any form, I would suggest taking profits. We have had a very good run, a dream run that comes ones in a year. Short-term traders should not push their luck. So, for traders, who are not long, a 75 point gap up is not a position where you want to go long. The market will consolidate, it will correct and then there will be many opportunities in the coming days to go and buy. It is far better today to focus on the banking sector and on individual stocks.

Q: But if the market does make that move towards the yearly highs of 5,640 or so, which Nifty contributors will take it higher today?

A: Primarily banks and to some extent, the underdogs like metals, Reliance and ONGC . The ones that are likely to underperform will be FMCG and pharma sector. I think this is almost self evident.

Q: Within banks, you would buy Bank of Baroda (BOB) for the day, does that look like a good strategy?

A: It does. Banks are just bottoming out. While the Nifty and the other components of the Nifty have seen significant rallies, the banks have started their show.

BOB has made a fairly decent base, a small one, but still worth looking at. It is a bullish head and shoulder. It had broken out on Friday as most stocks did. There is much more upside there. If there is a surprise on the banking side, it could simply add to the impetus. So, BOB is a good buying opportunity.

Q: Would you say the same for IDBI Bank ?

A: Yes. It is a pleasant surprise that IDBI, which was in a bear market, seems to be coming out of that. The PSU banks are now giving signs of life. That’s a good news. IDBI Bank has a similar pattern, a larger one, a bullish head and shoulder coming out of it. The worry is that traders may rush into buy at an 80-point gap up. That’s not a good idea. These buying opportunities will be there throughout the day. Whenever the market consolidates, go for the banks.