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Dec 14, 2011, 10.31 AM IST
After yesterday's flat closing, the temperament of the market is to be long for day traders, said Sudarshan Sukhani of S2analytics.com. He expects to see a rally and momentum players come in.
After yesterday's flat closing, the temperament of the market is to be long for day traders, said Sudarshan Sukhani of S2analytics.com. He said that the slightest sign of a rally will see short-term players and momentum players come in.
From the IT pack, Sukhani suggested Infosys as the best pick. Moreover, he indicated that 10% could come about in Hero Motocorp from the auto sector. Talking about the metals space, Hindustan Zinc seemed to have outperformed most stocks. He feels an immediate rally is possible to Rs 135-137 levels.
Here is the edited transcript of his interview to CNBC-TV18. Also watch the accompanying video.
Q: What happened in the last 15-20 minutes of trade yesterday? How do you see it play out today?
A: Somebody might have decided to buy. The markets were short-term oversold. There was big rush to cover up to add positions. We are oversold now. We have fallen 400 points. The slightest sign of a rally will see short-term and momentum players come in. The same thing should play out today. Yesterday, my suggestion was to wait patiently for today before taking a long position for a couple of days or even half a day. Today, wherever we open, the temperament and theme is to be long for a day trader. For positional traders, nothing has changed.
Q: Infosys has piped Reliance overnight to be the biggest weightage on the index. Does that look bullish?
A: Yes, it is bullish. Infosys finished its downtrend at Rs 2400. It has been up. We saw a fairly decent correction. For the last seven days, Infosys is in a narrow trading range. It's underperformed both Wipro and TCS. This trading range is not going to last. Among the four, Infosys is the most interesting as the trend is clearly up. Infosys is a buying opportunity even for position traders.
Q: Does Hero Motor look good as well this morning?
A: After a strong uptrend, it's in a trading range preparing to move above Rs 2,200 levels. But, now it is at the lower end of the range. It's reasonable to expect that a move to Rs 2,200 levels, which is almost 10%, can occur from here. The stock closed with gains. It's bounced repeatedly from Rs 1,900, including yesterday. A 10% gain in Hero Motors can eventually come about.
Q: You have a sell call on Bank of India. How do the charts look?
A: Bank of India is a disappointing stock. It has been in a trading range. So far, it has outperformed the Bank Nifty, but it will change and the range will break on the downside. Yesterday, we saw a down day that was preceded by a down day earlier. We should see follow through Rs 5 down and then see a breakdown of that consolidation. Bank of India probably is looking around Rs 280-290 levels. My short-term targets are much more modest, but the trade is on the downside.
Q: Pantaloon has been a complete washout. Is it primed for more selling today?
A: Yes. Yesterday, it touched the earlier lows. The patterns have changed. They have now become bearish. As we take out Rs 165 levels, we are probably looking at Rs 110 for a positional trader. The targets for a day trader are less. It's may be Rs 132-130 levels, but the decline is likely to accentuate. Pantaloon is now a sell at every opportunity.
Q: Yesterday, we saw a good comeback in metals. Today, you picked Hindustan Zinc from that bunch. How do the charts look?
A: Hindustan Zinc has been an outperformer in the metal pack. There are some very decent patterns. If this market doesn’t tank, it will be a different issue, but if this remains choppy or consolidates, Hindustan Zinc should outperform. We can set it aside from other metal stocks. Yesterday was an up day after four down days. This suggests that an immediate rally to Rs 135-137 is possible. It's a very good chart.
Q: What's your call on Biocon this morning?
A: Biocon has been falling. For five days, it rallied. Biocon is now ready to make new lows below Rs 300. That’s not a good chart. Whatever the fundamentals are, Rs 300 levels will break and we will then see it drift much further down. A lot of these charts are giving horrifying bull patterns.
Q: You have been talking about 54-55 levels on the rupee. Are you surprised at the momentum with which it is moving?
A: No, it's not a surprise. Once it broke out from Rs 47.50-48 levels, the momentum has been maintained. We have seen how it jumped to Rs 51-53 levels. This momentum tells us that this is not the end of the dollar rally.
Q: If we do start the day as it looks increasingly likely around the 4,780 mark, will you add a long position straightaway for a short-term trade?
A: After a cooling period of 10-15 minutes, I would look to buy. This is not a high convection buy. We have fallen a lot and we can get yesterday type rallies again. We are in a choppy market after a big decline. Consolidation markets are not easy and essential to trade. Within those constraints, I would probably be looking to buy rather than sell.
Q: With what kind of target? If you take a short-term trade, would you take whatever profits you get quickly 30-40 points and exit that trade or do you have a firm target on the Nifty?
A: There is no target. I would take a 40 point profit very gladly in the Nifty on the long side or even on the short side. This is essentially a day trade. I am not even sure if I want to carry it, which will be decided in the afternoon. It's a modest day trade with low volumes. The bias is mildly on the upside.
Q: Yesterday, some of the textile stocks did well. How is S Kumars ' chart looking?
A: It's a disappointment. I don’t think it justifies buying. We did see Alok and S Kumar do some minor gains, but S Kumar is a sell on rallies. It's not a buy yet.
Q: Welspun Corp has moved up last couple of days. What is your view?
A: It moved up dramatically yesterday rather quite impressively. It has become half of what it was in just two months. There may be a long trade here. Long trades have their own risk, but it's worth looking at a follow through today. If Welspun Corp continues to move up, there is a buying opportunity today itself for day traders.
Q: What did you make of the weakness in NHPC yesterday?
A: It broke down at Rs 22.50 levels and the pattern targets are about Rs 18 levels. Yesterday’s weakness is just a continuation of a breakdown two days ago. It can see relief rallies, but NHPC is a sell on every rally or even without a rally with a target of Rs 18.5-18 levels.
Q: Do you think 3i InfoTech , which has been continuously going lower forming newer lows, is headed even lower?
A: It's now at Rs 20 levels. It becomes difficult to imagine 3i InfoTech, which was Rs 100, Rs 80 and then Rs 60 levels, and go even lower. It's worth buying into rather then selling in. It has at least stopped it's bleeding. It might actually give a rally. From these levels, a 20% rally is Rs 4 which is quite possible. 3i would be a buy with a long term view.
Q: What did you make of yesterdays decline in Glenmark technically?
A: It has been horrible. Glenmark at Rs 300 has strong support and it is on the verge of breaking that support. The next target is Rs 250 levels. For intraday traders, Rs 250 won't come in a day. It's not just Glenmark, but most stocks are all on verge of breakdown or moving down. There is no sense in touching Glenmark before Rs 250 levels. It's a short sell.
Q: How do the charts look for Chambal Fertilisers ?
A: Chambal is a sell, but is a low conviction sell. It's not a pattern breakdown. It went up, did not rally because of the news about fertilizer, decontrol regulation and deregulation. Because there are many other opportunities, I won’t actually sell it.
Disclosure: I have no personal holding in any of the stocks discussed.
Tags: S2analytics.com, Sudarshan Sukhani, market, Nifty, momentum players, Infosys, Hero Motors, Hindustan Zinc, Bank of India, Pantaloons, Biocon, S Kumars, Welspun Corp, NHPC, 3i InfoTech, Glenmark, Chambal Fertilisers
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