Market is cracking, go short: Sudarshan Sukhani

In an interview to CNBC-TV18, Sudarshan Sukhani of s2analytics.com says, the trend is changing. "As of now, the market is cracking. It has given enough evidence that justifies a short position. Just keep volumes low," he adds.

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

Q: What is the call on the Nifty for the day?

A: We just start again those baby steps on the short side. We bought some September 5,400 Puts, let’s say about 10% of the normal volume. The trend, as far as we understand, is changing. So, we start going with the current trend.

Now, this could easily get a whipsaw and go wrong. But I don't think we should be worried about that. As of now, the market is cracking. It has given enough evidence that justifies a short position. Just keep volumes low.

Q: Does Zee Entertainment have a bullish chart?

A: With a subdued sense in the markets, we should only stay with quality and stocks that are giving distinct outperformance. Zee Entertainment has been a complete outperformer and I would expect that to continue. So, I am looking to go long in Zee.

The idea is Zee is trading at 50 day highs and is willing to go up if market sentiment turns slightly positive. The charts are at the top of their price range.

So, Zee is a buying opportunity. As usual, wait patiently for the market to show their hand. But this is a buy, not just for day traders but also on a dip for people who are willing to take positions.

Q: Ranbaxy Laboratories has moved from Rs 500 to Rs 550 in the last one month. Is that chart bullish too?

A: Ranbaxy belongs to the pharmaceutical group which has been a complete change from what the Nifty is doing .The pharma sector has been flying and doing very well. As a defensive, it is probably a favourite when other stocks go down.

Ranbaxy has crossed Rs 550 which was its previous high. It has been consolidating for the last two-three days. It’s making new highs but giving up some of these gains. But my sense is, if pharma sector is picked up again for buying as a defensive strategy, Ranbaxy should cross that Rs 550 hump and go much higher.

So, I would suggest Ranbaxy as a buy, but wait patiently for intraday signs which indicate that the stock is now gaining momentum on the upside. Once that happens it's not only an intraday buy, but also a positional trade.

Q: Your views on UltraTech Cement ?

A: We are continuing to go long in outperformers and that’s the broad theme. Look for quality stocks, look for outperformers, ignore the others, do not try any bottom fishing. I have been trying to explain this for many weeks now and that theme persists. So, we are going long in UltraTech Cement.

The entire cement pack as we understand and we know has been outperforming and UltraTech cement has done extremely well. It made new highs yesterday so that’s a place where we want to go long. Cement is probably a sector that will do well irrespective of what the broad market does.

Q: Rural Electrification Corporation (REC) is in your sell list today?

A: Financials are getting it on the chin. REC which was giving impressions of entering a bull market has broken down from a trading range. Earlier also Power Finance Corporation (PFC) and REC had started coming in our sell list.

REC’s trading range breakdown tells us that lower levels are coming. It is not easy to say if this is the beginning of a bear market or it is a correction. But whatever, at lest we are sure that it is a deep correction.

So, there is money to be made on the downside. So, REC is a short selling opportunity as are most financials and banks.

Disclosure: I have no holdings in the stocks discussed.