Market break-out will be much more than 20pt: Sukhani

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Market break-out will be much more than 20pt: Sukhani

Sudarshan Sukhani of s2analystics.com says that the market is likely to remain in the treacherous range it has been over the past week.

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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 SBI See messages about SBI

Sudarshan Sukhani of s2analystics.com says that the market is likely to remain in the treacherous range it has been over the past week.

"Expectations from the Street are almost nil," he says. According to him, the market range is very defined and it will need to break-out before any position can be taken on the Nifty. "I have no trades currently," Sukhani says, "except positional shorts that may continue for a longer time."

He says that the break-out too might not be just 20 points from the ends of the trading range, but much more than that.

Below is the edited transcript of the interview. Also watch the accompanying video

Q: After that 2.5% bump up last week, how you are expecting today to start?

A: Well, what SGX is saying is that we are going to start lower, but that really won't make any difference because we will still remain in that treacherous trading range we saw last week. The expectations are almost nil from the market till it comes out of that range.

Q: Any trades that you are taking depending on a small dip in the market or you would rather see a firm break beyond this range to take any serious positions?

A: No. The market needs to now breakout because that range is very well defined. We all as technical traders understand that trading ranges are extremely treacherous. They give you the sense of optimism as they go up, and once they start coming down there is a sense of pessimism. Eventually, both the boundaries hold. So that's just choppy market movements.
I wouldn't be taking any trades and I don't have any, except for a positional short that continues for a long period. So it's much wiser to wait for a decisive breakout. That breakout will not be for 10 or 20 points. It will be for much more. That will be the trade to take.

Q: We were discussing the fundamental woes on Bharti . Technically, is there a short opportunity there?

A: Yes, Bharti has been a short side trade for some time now, and that continues, which really means that at some point or the other, not necessarily now, Bharti is going to crack Rs 300 and go down. Even now Bharti is a short sell. Take a tight stop loss and look for a modest target of Rs 320 on the downside. You could actually see it slide lower.

Q: What about Infosys which announces results soon? Of course, this week there will be fundamental news, but technically, it's looking strong?

A: Technically Infosys is very strong. It's trying to cross its Rs 2,900 level. Even on Friday it made an attempt during that Reliance rumor period. It did not succeed because the stock market came down. But the message in Infosys is very clear that any dip here is a buying opportunity. You look for Rs 2,900 as an initial target, but if that is broken, then you will look for a significant positional up move. Like all other trades, you have to keep a stop loss, but Infosys after three days of correction is right for a rally.

Q: What would you do with SBI today?

A: SBI is a buy for me. SBI has done the same thing. It has corrected for three days. If this market is going to go up, large heavyweight stocks that have completed three days of correction should start showing signs of some life by close. Intraday whatever they do, they should a better close. SBI comes in that large heavyweight category. Three days of correction, a resumption of the uptrend should be possible.

Q: Another buy in your list today is BEML ?

A: BEML is now trading at Rs 476. In the 2007 bull market it had reached Rs 1,900. Let's not forget it's a PSU stock and not a penny stock so from Rs 1,900 it has crashed to Rs 476. In last bull rally, BEML peaked out around Rs 1,275, so from Rs 1,275 BEML has slowly and steadily come down to Rs 476. The stock is finding multiple supports around Rs 440-450. From a long-term view, I think BEML is bottoming out now. If that is a long-term view then in the short-term BEML is in a tight 20 points range for the last three weeks. It's ready for a big move and it should be on the upside. So BEML is a day trade. On Friday it actually closed higher. So that suggests we should see follow through today in some kind of a breakout on the upside.

Q: What about Raymond ? Since the start of December it's fallen off from that Rs 400 level. You would continue to sell that?

A: Yes. In the current scenario, stocks which broke out on downside are now continuing to slip further. Apparently, Rs 400 was a double-top and once a double top was confirmed, Raymond started its downswing. I continue to remain bearish on it until a reversal pattern is made but there are no signs of it in the near term. So, one should continue to sell Raymond.

Q: Welspun Corp on which you are bullish today?

A: Welspun's rally from Rs 60 to Rs 100 went unnoticed by the market participants and now it has retraced back to Rs 80-85 levels. But now there is a message that something is going on in this stock and it's making steady gains. It's at new 20 day highs. I think it makes sense to go and buy it once the momentum picks up in midcap stocks. One can buy the stock with a target of Rs 120.

Q: I was asking you about the gut feeling last week about which way you think the breakout will happen. There is a view that even if you do make it past 4,800, it may just be a misleading breakout because some of the technical parameters are weakening for the market in the medium-term. Would you agree with that?

A: Yes, I would. In fact that's what I said when I said that my gut feeling that markets can do anything was that we should breakout above 4,800, but certainly, if we do move above that level, while there will be a short-term trade on the long side, the chances are very strong that that is only a short-term phenomena before we retreat and turn back towards 4,500 or lower. So any breakout is a very short-term trade. But it can happen and  that's not a surprise.