Go for stronger stocks rather than index: Sudarshan Sukhani

Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by Sudarshan Sukhani See what other Experts & Brokerages are saying about Dish TV India See messages about Dish TV India Dish TV India BSE | NSE 29/05/12 Are Mutual Funds betting on Dish TV India? Other Stocks in this news Hindustan Zinc | Motherson Sumi Systems | Hindalco Industries | Vijaya Bank | NMDC | Tata Motors | Hindustan Unilever |

After two months of consolidation, the Nifty convincingly crossed 5,100-mark, but experts are yet to call it a bull market. Sudarshan Sukhani of technicaltrends.com told CNBC-TV18 in an interview that the market needs another upside. "Unless the market gains another 200 points, it can't be called a bull market," he added.

Sukhani suggested going for stronger stocks than the index. He feels now is the perfect opportunity to buy Dish TV as it has strong support close to Rs 65-68 levels. From the metal stock, he has a sell call for Hindustan Zinc . He recommended the stock only for a short-term trade as there could be more downside ahead.

Motherson Sumi has been an outperformer even when the market was choppy. For the short-term, the stock would workout for many traders, whereas for the long term, traders should buy the stock at dips, explained Sukhani.

He further advised that midcap stocks should be bought at deep corrections.

Here is the edited transcript of his interview. Also watch the accompanying videos.

Q: Is the market looking pretty or do you think it has not changed too much?

A: This is probably a rally in a bear market, but it is not the same case for traders who trade in and out everyday and every week because the momentum is up. As far as upside momentum continues, traders should look to buy on dips.

Q: What do you think of the Nifty over the medium-term?

A: We consolidated for two months and then broke out, which is a good news for the bulls. This is exactly how a bull market should start. But, 5,300 mark for the Nifty is not significant.

Another upside is required to confirm that 4,700 levels was the bear market low and is done with now. Only after we move up another 200 points, I would call it a day for the bear market.

Q: You got a buy out on Dish TV this morning. Could you take us through that?

A: Before this correction, Dish TV was one of the outstanding performers. Outperformers will usually remain outperformers. The stock has corrected and after that it is looking a little lively.

Since yesterday, the Nifty is choppy and range bound. We should focus on strong stocks rather than the index. Dish TV qualifies a perfect candidate for a short-term buying opportunity. This is a dip in an ongoing bull market for Dish TV. It is an opportunity to buy the stock.

Q: What do the medium-term charts of Dish TV tell you? Where is the floor for the stock? Once this trading move plays out, what kind of levels could you be heading to?

A: Dish TV has support at Rs 68 levels. The range between Rs 65 to Rs 68 levels should remain as strong support. My levels are for today or tomorrow because they are very modest.

The first move should eventually take the stock to Rs 95 levels. If the markets suddenly decide to turn back, these things will change. Even then, we should remain with the outperformers and this stock is one of them.

Q: You have a sell call on Hindustan Zinc this morning. Are you cautious on last week's big rally on metal stocks?

A: Yes. Hindustan Zinc is essentially a short term trade. We will see choppy markets, where there are opportunities to short sell. We have seen a 20% rally in Hindustan Zinc and it closed at the lows of the day yesterday. There could be more downside for the stock.

For short-term traders, it makes sense to short stocks in a choppy market. Metal stocks now qualify for the shorting idea.

Q: The other buy in your list this morning is Motherson Sumi. Why is your view on this stock?

A: Motherson Sumi was an outperformer in the bull market. It outperformed even when the Nifty fell in April, May and June. This midcap stock has been praised by fundamental analyst and appreciated by technical traders.

Midcap stocks should be bought on deep corrections. This is an outstanding stock available at a deep correction. For the last two days, it has been giving the first signs of revival.

For a short-term trader, the two or three days will hopefully work out. For a positional trader, Motherson comes in as a buy on dips opportunity. The stock would see a test of Rs 250 levels again.

Q: You have a sell call on NMDC this morning? What is your take on that?

A: The reason is same as Hindustan Zinc. Hindalco also is a part of the list, but NMDC and Hindustan Zinc are the weaker ones. NMDC rallied yesterday to the top and immediately fell from morning onwards. In a choppy market, the short trades make money.

For a day trader, I would advise to wait for the first 15-20 minutes. If you sense weakness continuing in NMDC or Hindustan Zinc, there could be much more downside for the short-term traders.

Q: It looks like the market might start 40-50 points lower today. How would you approach trading from a tactical perspective on the Nifty?

A: It is quite possible that we will see a dip, which doesn't matter. We saw 200 point gap on the upside, which has to be corrected in some form or the other. The trade is still on the long side. If the Nifty falls and starts with a 50 point decline, it would be wise to wait patiently for half an hour or 40 minutes for markets to consolidate and then buy the Nifty. I would still take a buying position rather than going short. Momentum clearly favours the buyers as of now.

Q: How is strong is the correlation still between the Bank Nifty and what the Nifty does?

A: It is fairly strong. Last week, the bank Nifty collapsed after the RBI policy announcements and then recovered fairly quickly. Last week, it was lagging the Nifty, but yesterday, the Bank Nifty did much better. The correlation is intact because it has come back to where Nifty is, almost at the same levels. The Bank Nifty and Nifty should both move in tandem. It is a matter of choice for traders, whether they want to trade bank or Nifty.

Q: Vijaya Bank  was nearly 9% up in trade yesterday. What is your view on that stock?

A: Vijaya Bank was up 9%, which creates a problem. After the massive gains in a midcap stock, they will rest. I would suggest holding on Vijaya Bank with a wide stop at Rs 56 levels. It won't go there, but we still need a protective stop. Look for gains at Rs 66-67 levels. I would not buy it today, just hold it.

Q: You have been a bit circumspect about the metals. Hindalco made a big move and corrected yesterday. What is the right way to approach trade on that stock this morning?

A: Hindalco has been an underperformer for different reasons. If the market is weak, we would want to short metal stocks. Hindalco is a shorting candidate. We are looking at a trade of maybe two-three days. Within this time span, all metals should be sold into, which includes Hindalco. For Hindalco, keep a stop loss because short selling in a momentum driven up market has its own blips.

Q: Tata Motors  went above Rs 200 and has come back to Rs 190? What should one do with that stock?

A: This is a buy on dips trade. The stock went from Rs 140 to Rs 200. Tata Motors has gone through a small correction. If markets consolidated and begin to go up, Tata Motors should be bought in to. You keep a tight stop loss at Rs 196. This level could change depending on how the market and Tata Motors opens. The trade is on the long side. I suggest keeping a tight stop. Before the market opens at Rs 196, a modest target is Rs 208. Do not short sell in any case.

Q: HUL was up 7% yesterday. It also made a 52-week high for itself. Technically, how does that look?

A: It's a dream. I was upbeat on HUL when it crossed Rs 300. I continue to remain upbeat. One can still buy Hindustan Unilever. You need a little bit of wide stop for traders. This stock is an outperformer. HUL has come out of a 15-year consolidation. Yesterday's gains will be building into and we will see higher levels before a consolidation starts. Buy HUL with a stop at Rs 360 or so. Slightly depends on how it opens and the initial target could be Rs 392.