Mkts must learn to live with volatility: Sudarshan Sukhani

Excerpts from CNBC-Network18's exclusive interview with Sudarshan Sukhani:

Q: What do you expect to see next, a bit of a dip, which is a buying opportunity or is there a possibility of a U-turn again?

A: I am worried that there could be a possibility of a U-turn or at least certainly the absence of a buying opportunity. This volatility, which we thought has gone away has emerged back again so the first factor that has now changed for this bull market is the increased volatility and I think we will have to live with it.

The problem here is that bull markets do not like volatility so I come to the second conclusion where I feel that maybe we are now in for a long period of consolidation and that is worrying because a consolidating market could easily go back to 4,000 or thereabouts in the Nifty so I am not that much sanguine about the buying opportunity now.

Q: In the very near-term this morning if you do get a gap town opening you are saying you would not rush to accumulate on the Nifty?

A: Yes, that's right I would not rush into accumulate what I will instead do is to focus on the out performers and if at all there's a sense that this market is not going down then shift my attention to the stocks which I usually do not do but the Nifty has become too volatile perhaps in the near future.

Q: Has it come to that point where you consider opening any shorts or not quite yet or it's still generally bullish?

A: On Friday itself there was a sense that this market is coming down and we had recommended opening of short position for the short-term traders, so that point was reached. Earlier for the last first four days of the week, the Nifty was trading in a very narrow range. The narrow range by itself signifies that there is resistance and bulls are not able to cross over that hump and then there was this feeling that ok short positions by aggressive traders are justified.

If one asks can Nifty make a new high or go down to 4,000. My sense is that unfortunately the market could do both.

Q: Even if you don't take that call on accumulating for this market when do you change your strategy to initiating a short on the Nifty?

A: I would say that even at current level although a gap down is not a shorting opportunity. At current level a trader could identify a suitable location for going short with a stop loss, which is 4,550, that's where the markets stopped this time and at this point short positions are justified.

I would advice that only professional expert traders should consider going short in this market.  

Q: For people who have opened up shorts on Friday would it be advisable to cover if the market open gap down today or you would let it remain open?

A: For short-term traders who was just waiting for this kind of opportunity it would be sensible to cover now with whatever gap down profits he can get but for anyone who is making a call on the intermediate trend of the market he or she could as well maintain the short positions. I'm making that call that may be this market is going to find it difficult to go to new highs soon enough. 

More to come...