SENSEX NIFTY
Jul 12, 2012, 08.23 AM IST | Source: CNBC-TV18

Mkt to be volatile ahead, buy on sharp corrections: Sukhani

Technical analyst Sudarshan Sukhani, s2analytics.com is now approaching the market carefully and cautiously. "From now onwards, I am assuming that markets will be much more volatile and that means we will see downside moves also," he said in an interview to CNBC-TV18.

The Sensex gained over 430 points on Friday, posting its biggest closing gains in the year 2012 as global markets rallied quite sharply after European leaders agreed to take emergency action to bring down Italy's and Spain's spiraling borrowing costs. The Nifty rose around 130 points to end at 5,278.90 on Friday.

Technical analyst Sudarshan Sukhani, s2analytics.com is now approaching the market carefully and cautiously. "From now onwards, I am assuming that markets will be much more volatile and that means we will see downside moves also," he said in an interview to CNBC-TV18.

He suggests that one should buy only on sharp corrections and not rush into a gap open.

Below is the edited transcript of Sukhani’s interview with CNBC-TV18. Also watch the accompanying video.

Q: How are you approaching trade this morning and what looks like a doable target for the Nifty once it cleared that 5,200 bump on Friday?

A: I am approaching trade now a little carefully and cautiously. The idea is that short-term trades were closed on Friday afternoon just before the close and that was good. But, now position trades will be held assuming that we are going to see a lot of volatility.

It is not likely that we are going to just take a step and reach 5,400 or 5,450. So from now onwards, I am assuming that markets will be much more volatile and that means we will see downside moves also. The idea is to buy only on sharp corrections and not rush into a gap open.

Q: You have a buy on Tata Steel this morning, tell us about that?

A: Yes, I have a buy on Tata Steel. The stock finally broke out above resistance level at Rs 425. I think most quality stocks have done that. But for Tata Steel it was a bear market of some kind, it fell below Rs 400, so this breakout tells us that the downtrend in Tata Steel is probably over. So inch-by-inch, slowly the stock is likely to move up. Today, in a choppy market there will be stocks that move up and stocks that go down. Tata Steel is likely to be one of the winners today. So for a day trader, it is worthwhile focusing on this. Buy on dips or even buy after the first fifteen-twenty minutes.

Q: Power had a good session in the last two weeks; you would buy NTPC this morning?

A: Yes, I would. In fact NTPC was in my buy list even last week, that continues. Again the same story, NTPC had a very terrible period; it went through a bear market of its own even while the markets were just in a 500 point range that seems to be over. So, if this is over and that message is coming not just for NTPC but for a lot of other power related stocks REC, PFC and even Tata Power then there is something going on in the power sector. NTPC is well poised to take advantage of it as the sector leader and as independent chart also. Friday’s gains were coming because of a strong breakout from a resistance level, they should be build upon.

Q: There has been quite a come back for the banks as well, Dena Bank you would buy today?

A: I would but I must confess that Dena Bank has been a bit of a disappointment. I really thought that it would fly away, it came in my buy list last week but it hasn’t done much. It is still in a trading range. I am assuming that this trading range will eventually resolve itself on the upside because today the markets should see some gains and at least selectively there will be stocks that go up. I am looking to buy Dena Bank but a little carefully because it didn’t do what I expected it to do last week.

Q: From the rate sensitives again, Indiabulls Real Estate ?

A: Indiabulls is a much better chart. It has done the right things. It made a double bottom, we had it coming in our buy list repeatedly, it broke out of a double bottom then a small correction and it has again broken out. It is telling us that this is just a beginning of what hopefully will be a strong uptrend. In Indiabulls, we shouldn’t worry about the big rally we saw on Friday, everything rallied on Friday. Today, if we get it on a dip, I would be a buyer there.

Q: You have a sell on GE Shipping for the day?

A: It is a disappointment. Last week, we had one day when shipping suddenly started moving up but that was it. It was just one day. So on a day, in a period when the Nifty has gone up from 4,800 to 5,300, GE Shipping has done nothing at all. It remains in the lower end of a very wide trading range. So at best, it will slide down to its lower end, support levels and at worst, it will actually break down. So in either case, GE Shipping now is a sell.

I must also point that while the targets for this upmove are 5,400 or even 5,500, that is for the month end. So we are going to see ups and downs probably.

Q: You have a sell on GMDC as well?

A: Yes, GMDC had a good chart. It had a decent rally from Rs 160 to Rs 185. Here, there is significant resistance in this stock. Metals in any case are underperformers. So whatever performance was likely to come from the stock price has already come in.

In any event of a market say correction of a market consolidation, metal stocks are likely to be underperformers, GMDC because of the fact that it fell on Friday, tells us that the rally is over and it is likely to be the first one to see a correction.

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