Mkt to slump in near term; support at 4400-4450: Sukhani

ALSO READ See previous views by Sudarshan Sukhani See what other Experts & Brokerages are saying about Reliance See messages about Reliance

For the immediate short term, Sudarshan Sukhani of s2analytics.com tells CNBC-TV18 that the market is likely to see a downtrend. "I don't see the relentless selling coming down, so they key here is to sell on rallies," he said.

He believes the Nifty will break the low of 4530 and drift downwards, but sees strong support around 4400-4450.

However, Sukhani believes that the year 2012 will bring cheer to the bulls.

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

Q: You were quite cautious on the market through all of last week. How are you approaching trade today?

A: I think 2012 will certainly bring cheer to the bulls. This week is a different issue, but bear markets seldom last for more than 24 months. We are already 14 months into this bear market, so hopefully this year will see the end of that bear market. That's the bit of good news I think we can start this year with.

This week is a different matter; I don't see the relentless selling coming down. I am approaching this week with a very simple strategy - we are in a downtrend, the intermediate uptrend is well over. We have made a minor high at 4800, but the short term trend is down. So the key here is to sell on rallies.

Q: To what kind of levels are you expecting the Nifty to drift down to in the short term trend that you were just describing?

A: I think we are going to break that 4530 low. That's not very significant. The only significance is that it will break down, new lows will be made. I am assuming somewhere around 4400-4450 is a strong band of support. So the first drift of the Nifty should break a low, make new lows and reach that level. Then we will have to see.

Q: You have got a lot of sell ideas today, one of which is HDFC Bank .

A: We are making lower highs, not only in the Nifty but in most of the best of the blue-chips and HDFC Bank is doing the same thing. Banks are now cracking and I get the impression that finally HDFC Bank is almost ripe for a big decline. So this is a short term trade. The trade here is to go short, look for modest target of Rs 410 or so, but the thrust is on the downside now.

Q: You are short on TCS from IT today?

A: It's not that TCS has suddenly become a portfolio short, but we are short term traders and we are looking for events that will occur during this week. I suspect TCS as well as its sisters, Infosys and Wipro , are going to see lower level before they start publishing their results.

Charts are suggesting that TCS is ripe for a correction. How deep is something the market has to decide. But if there is a correction, short term traders can well take advantage of it. Look for Rs 1130 or even Rs 1100 on the downside, if the correction is deep enough. It can also be taken using puts so that's an advantage.

Q: Real Estate has been looking poor. Do you see more downside risk for DLF ?

A: Yes. Earlier also I explained that DLF is going through a major breakdown. The Rs 190-191 level for DLF has held and is now going to act as a resistance. The targets for DLF are about Rs 115-120; I wouldn't be surprised if we reach that target once this bear market gets over.

So there is a significant downside, not just for the day traders or swing traders, but for position traders also. DLF is a sell at every opportunity. This is not a reflection on the company, none of what I say is, it's simply the chart action.

Q: The only non-index shorts you have this morning is Adani Enterprises .

A: Adani was in a trading range for about a month and half and now that is on the verge of breaking down. It hasn't done that, but given the thrust of the market on the downside, we are going to see a breakdown of that trading range. That range will then act as a bearish flag suggesting significant more downside. Now suppose the downside doesn't come, we have a stop loss, but if it does, traders could be ready to ride a very deep downtrend starting now after this big decline.

Q: With what kind of upside are you buying Lupin today?

A: Lupin is a buy mainly because it has gone through a deep correction. I am looking at Rs 465, but that's only the initial target. It's also possible that the stock may actually begin a new rally from here. It has been in a small trading range, actually rising in this falling market. So that Rs 469 is an initial target. If the momentum is on the upside it could outperform significantly.

Q: PFC , which did well on Friday, is another buy this morning for you.

A: That's a falling knife trade; I call them falling knives because I am buying them in anticipation that the stock will stop falling, but sometimes it doesn't. In a declining market, there are inherent risks, but PFC and REC have both fallen significantly and are probably ripe for some kind of a relief rally.

Sometimes stocks will go through a rally, even when the broad market is coming down. So the trader doesn't have to go and buy it right at 9:15. Wait patiently for 10:00-10:30 for the market to stabilize. If you see any signs of stability, then PFC becomes a buy and you would actually be entering almost at the lows.

Q: How would you approach a start around 4640 for a trading strategy at the start of the year?

A: The strategy for today is to look for a short selling location. After giving some time for the market to cool off, if the Nifty slides below 4630, which was the levels we saw on Friday, is a short selling location. People who are already short, this is a place where you can add to your short term positions and for people who are not, this is a place where you can begin your short positions.

Suppose the market doesn't slide and rallies, then you sell in the rally. Somewhere close to 4700 is an excellent place to begin and build up a short selling portfolio. Buy puts, sell futures - both are easy to do at that location that could be ideal. So there are two trades on the Nifty today both on the short side - one on a breakdown and one on a rally.

Q: There has been a lot of talk about Reliance ever since it broke that Rs 700 mark on Friday. What kind of levels do you see for it?

A: In the slightly intermediate term, I see Rs 630, even Rs 600. But for a trader, who is looking to trade Reliance, it is a short sell. We are looking at Rs 665-660 in this week. Reliance's charts are extremely dismal and we are likely to see much lower levels. So investors can as well hold their cash and buy at a lower level.

Q: The other stock which closed very weak last week along with Reliance was IDFC . Where is that chart heading you think?

A: It's heading towards Rs 85 and then lower towards Rs 70. At the rate at which it's going down, probably it will reach its IPO price. It's a very disappointing chart. It has no relief yet. The only trade here is to go and sell it at appropriate levels. Current prices are an appropriate level for IDFC.

Q: What about something like VIP ?

A: It has been a short sell since Rs 200 and the chances are that it will keep on falling till we all forget and stop talking about it on TV. It's still a sell; you look at Rs 69, then Rs 65, after which it will start making new lows. All of these concept stocks will be forgotten.

Q: You were speaking about HDFC Bank earlier. What about Kotak Bank ? Do you see similar kind of down trending patterns there?

A: Actually it's similar but worse. In HDFC Bank, the sense is that we are looking at corrections because the market is also down. But in Kotak Bank, there is no correction. The market trend has changed and it has entered a bear market. So in that sense, Kotak's charts are very clear short sell at every opportunity.

Q: How do you trade something like a Glenmark ?

A: You look for a higher target. The entire pharma space is suggesting that it outperforms when the market goes up and it could actually go up even when the markets fall. Glenmark is part of that group. Look for a target of Rs 310-315 or even Rs 320. The only point when you go and buy is in a down trending market, when you are very sure that the market has stopped falling. That happens during intraday consolidations. Once that sense comes, then some of these stocks on the long side will make money and Glenmark is one of them.

Q: You saw a bit of relief on GMR last week. Do you see it extending?

A: I don't know about the extension part, but GMR is a buy. The point is that these stocks have been beaten down and there is no reason why they cannot go down further. So to that extent, it's difficult to say what will happen. But there is a bit of consolidation, there is some relief. So if at all a trade needs to be taken, for the short term trader it should be on the long side, it should be a buying opportunity. Look for a target of Rs 24 also. My point in explaining this is that you need not take a trade in GMR at all - that is my point.