Mkt to remain choppy within 5300-5500 range: Sukhani

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Mkt to remain choppy within 5300-5500 range: Sukhani

Sudarshan Sukhani of s2analytics.com tells CNBC-TV18 that the market is going to remain choppy while trading in a range between 5300-5500.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets

Sudarshan Sukhani of s2analytics.com tells CNBC-TV18 that the market is going to remain choppy while trading in a range between 5300-5500. "So it's best not to trade the Nifty at all," he said.

However, if 5300 gets taken out, Sukhani says some trades could be developed. "On the upside, I think it's fair to just step aside and let 5500 be taken out," he added.

On a broader note, though he believes it is too early to say the trend has changed, Sukhani believes that there is a pattern of lower highs on the Nifty. Since the previous rally fizzled out much earlier than 5630, he expects crossing the 5600 threshold will take its own time.

Below is an edited transcript of his interview with Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.

Q: We have had an extremely choppy kind of week. How would you approach trade on an intraday basis?

A: It's going to remain choppy, so it's best not to trade the Nifty at all. Some contours of trading range are now visible. We have 5300 and 5500 and we are just in the middle of that trading range, so it is hardly a right location to trade.

Now sometimes it is possible that some trades could develop during the day if we crack 5300 and go below it. On the upside, I think it's fair to just step aside and let 5500 be taken out; that's the long trade, if that happens.

Q: We were just talking about DLF . Technically is it looking weak to you?

A: Yes. Some stocks also are now making bearish distribution patterns, and DLF is on the verge of confirming it. The exact reverse patterns were available in December and in January beginning when all the stocks started making those bullish patterns, those bullish head and shoulder, bullish break outs. Now we are seeing the reverse.

So DLF is making a very bearish pattern that suggests significant downside. I don't think it's going to stop at yesterday's closing prices. We are looking at much lower levels and it's a short sell. It's actually a positional short sell; you could take put options and set up some kind of spreads but on the bearish side.

Q: You are seeing similar patterns in Adani Enterprises ?

A: Yes. It rallied for seven days when it moved from Rs 250 to Rs 450. For the rest of the last four months it has been in a trading range, either falling or consolidating or distributing.

It seems that the decline from Rs 450 to the current price was the end of the bull market. Adani is relatively weak stock - the two of them together. I would assume that at some point the stocks will crack even if the broad market goes up and eventually reach Rs 250, which is from where they started. This is not a market that's rewarding all stocks; some stocks are showing clear signs of distress.

Q: HPCL is one of you buys?

A: Something wonderful is going on here, and it is the same thing as BPCL and even IOC. So HPCL simply was a better chart for the day. The patterns are the same. All three of them are making significant important basing patterns and breaking out of them.

So in this market if we are getting decent buying opportunities supported by chart patterns, we should simply take them. So here also the trades are not just intraday but they could be considered to be positional trades on the long side.

Q: What about something like Mercator ?

A: Mercator saw that very big rally, a small correction and what maybe a resumption of that uptrend. It has rallied a lot from Rs 15 to Rs 30. It has doubled itself so there is a trade here.

If it doesn't workout, the stop loss should be used in this case. But it is possible that it may make new highs because the correction was very brief and shallow and that suggests strength in the stock. Disclosure is that I have some shares in Mercator.

Q: You are optimistic about the chart of Zee also?

A: Zee has been in some kind of a minor correction while the broad market was going up, but that correction seems to be over. Now it is difficult to say why Zee should suddenly go up as the market begins a period of rest, but market does strange things.

Zee is now outperforming the Nifty. It has also completed a correction and yesterday it rallied and that rally could be the beginning of a new up thrust. So if we buy today and if we are right, then we could be actually buying at the lows of what could be a new uptrend. If it doesn't workout, again we have to use these stops because there is no way of saying that this is a strong uptrend. It is not, because some stocks are distributing.

Q: Welspun Corp is something that you are quite bullish on this morning.

A: One of the reasons is that it has already moved up from Rs 60 to Rs 150 and that tells us that there is a lot of momentum in these stocks. It also went through a very shallow correction just like Mercator. So shallow corrections are indicative of the fact that there is more upside. A deeper correction is not going to come now; it is probably pending for some other day.

Momentum is on its side and the chart patterns suggest there is probably more upside before it starts consolidating, so it's probably a very good intraday trade also. If it crosses its initial half an hour or 15 minutes highs in the morning, both Mercator and Welspun should be looked at for intraday trading.