Mkt to remain choppy; Nifty trading optional today: Sukhani

However, he cautions that the correction could be much deeper than expected.

"Positional traders who took positions when we suggested at 4,850-4,880-4,900 areas, 5,000 should remain as a stop loss and that will make money for the traders," he advices. One should close positional trade and wait patiently for new signals if Nifty closes below 5000 levels.

He expects the market to remain choppy today and says Nifty trading is an option today.

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

Q: Got a big dose of volatility yesterday. How do you approach the index this morning?

A: Yesterday was a disappointment in so many ways because the market could have consolidated, but prices fell and the international markets have joined that party on the downside. With all of that the Nifty is still above 5,000, so I have to assume that markets could be going through a correction. The problem is that this correction can be much deeper than we like it to be.

For positional traders who took positions as we suggested at 4,850-4,880-4,900 areas, 5,000 should remain as a stop loss and that will make money for the traders. If the Nifty slides below 5,000 and closes below that mark, then I would say close positional trade and wait patiently for new signals.

That creates a sense of confusion for today also, I think markets will remain choppy. The view is that somewhere up or below 5,000, we will try to go long and that may or may not work out, so Nifty trading is an option today.

Q: You have a buy on Bombay Dyeing ?

A: Bombay Dyeing had fallen on news. It fell from Rs 550 to Rs 380. It has now begun a rally again, so it’s possible that the decline was a correction. I think it was an ongoing bull market for Bombay Dyeing. The short-term trend is up and as it moves above the levels of Rs 530-540 the chances are that it will change the trend on the intermediate term. Yesterday was a good day for Bombay Dyeing and there is some sense in buying it. If this market opens with a lower gap one has to be patient to get these longs in. But that opportunity should come during the day.

Q: Tata Chemicals is a good looking chart as well?

A: Yes, it is more of a buy on anticipated reversal. Tata Chemicals has been falling consistently and now it has stopped the decline. It has been making some narrow range pattern since last three days, which suggests upside momentum is likely to begin. If one gets into Tata Chemicals then one is buying almost at the lows. So with a small risk Tata Chemicals is a buy. Tata Chemicals is not high volatility or actively traded stock. It’s more of a positional or swing trade rather than just a day trade. 

Q: You are selling Ranbaxy today?

A: Ranbaxy’s charts which were extremely upbeat and bullish have suddenly turned around and it’s making a distribution in the Rs 480-530 area. That distribution now seems to be getting confirmed and prices are working on the downside. Ranbaxy is willing to break Rs 470-475 strong support line. I think it’s just a matter of chance and it’s not correlated with the index also, so the Nifty could go up and Ranbaxy could go down. Now, Ranbaxy becomes a short sell, for many traders it is an avoid. There is money on the downside for day traders, professional traders.

Q: Divi’s Laboratories is also a sell?

A: Divi’s Laboratories had a remarkable rally but for the last one month it’s stalling at Rs 900-950 area and the first signs of exhaustion are coming in this rally. A strong uptrend can lead to a significant correction. It doesn’t have to be a bear market but traders can take advantage of the downside. The downside is enough to be tradable.

Divi’s Laboratories is now giving a sign of distribution and the first signs of a crack were available yesterday. If one gets it right then one is selling almost at the highs and that has its own benefits. So Divi’s Lab with a tight stop loss is a short sell.

Q: United Spirits continues to be a sell in your book?

A: United Spirits is a sell.  Last three-four days saw a mild rally in it and that rally is a bear flag. That flag suggests that the same downside as the last time is going to come which brings it to Rs 480-490 again. That was my eventual target not once but many time and it has done that. It is one of the weakest stocks in the consumer durable sector and it needs to be sold whenever the opportunity arises.

Q: You have a buy on Bajaj Auto ?

A: Bajaj Auto has been an excellent performer. The declines were a correction after an out performance and that correction has come to an end. Bullish reversal patterns are seen and that is always a good sign. Sometimes the stock will become choppy after that reversal pattern but they essentially give the message of going up. So, in case of Bajaj Auto a micro double bottom is confirmed and that comes after a sustained decline. I think Bajaj Auto is now entering its renewed uptrend, bull market and there is a buying opportunity. Yesterday we saw gains and the markets will build on those gains today.