Need to move out of 100-pt range to trade better: Sukhani

In an interview to CNBC-TV18, he says we are still in a trading range. This 100-point range makes the Nifty's future direction clear. "The 100- point in which the Nifty is moving is a no trade zone. Once we move above or below that level there is significant trading availale to us," he says.

Getting stock specific, he has a buy call on Titan. It is not one of his favourite picks but he does see buying opportunity.

Sukhani also sees good value in NMDC after reached its 20 day high yesterday. "If you see strength when the market is choppy you buy them but keep a modest target," he says. Rs 185 is his target.

Below is an edited transcript. Watch the accompanying video for more.

Q: What kind of trading strategy should one approach with this morning on the Nifty?

A: The bias remains on the long side because we are in some kind of a short-term momentum. But even taking a short position is an open idea. It’s not cut off today because we are in a trading range so a range breakout or breakdown should be traded.

Q: Is it a confusing time for Nifty traders where you don’t know where the next 100-points is going to come from? It might be a better idea for people to maybe just trade a little easy?

A: It’s not confusing in the sense that the trading direction is very clear. We should buy if 4,800 is taken out and sell if 4,700 is broken down. In that sense, yes, it’s quite easy to trade. But the 100-point range in which the Nifty is now moving for the last two days is a no-trade zone. There is no sense in even trying to trade except for very small intraday trade which pops up on and off or 10-20-30 points. There is no trade in this 100 point-locking zone. But once we are above or below, there is very significant trading available to us.

Q: You have got a buy on Titan this morning?

A: Yes, even though Titan is not one of my favourites. But the fact remains that in the short-term it suggests that the decline has been overdone for the time being. There is a short-term bounce. In high beta strong momentum stocks or concept stocks some of these bounces can be quite profitable to trade on the upside also. So Titan is a buying opportunity. It made a new 20 day high yesterday although that did not sustain but we could see a follow up today. So, there is some reason to go for Titan.

Q: NMDC was up about 4% yesterday. Do you think it’s good for more?

A: It’s the same story, new 20 day highs. This essentially tells us that there is momentum in the stock and maybe it is entering an intermediate uptrend, may not be. But the theme is that if you see strength and the market is choppy sideways with mild upside momentum, you go and buy them. So NMDC qualifies.

NMDC has been one of those stocks that have been beaten and bruised almost without recognition. So relief rallies can give decent up moves. NMDC remains a buy. Keep modest targets. Rs 185 is a target that I have thought of and I don’t think we should look for bigger runs here.

Q: You are playing long on Crompton as well?

A: Yes. This was a stock that was asked by Udayan yesterday, as to whether it’s bottoming out and I said - maybe. The word is still ‘maybe’ but it’s interesting. After that huge decline and the fact that Rs 180 did not hold and I also felt that no, we are going to see lower levels - we have come to the Rs 120 levels. Now at Rs 120-130 Crompton is making a trading range.

That could be the beginning of a base which could remain choppy. But it’s doing all the right things to justify buying in a sideways mildly bullish market. A target of Rs 138 is there but I would suggest that if the target exceeds or if you see closing with strength, you can actually carry your positions also.

Q: Zee is on your sell list?

A: Zee hasn’t actually broken down but the charts, the base; the kind of choppy action it is showing at the lower end of a trading range suggests that the breakdown is eminent. A lot of media stocks are not doing very good things. Zee is leading that pack. Zee Entertainment is going to breakdown and go below Rs 100.

This is a short selling idea. In a choppy market we can take both sides of the trade. Some stocks can be bought and Zee is an ideal short selling candidate not just for day traders but for somebody who wants to take a position and look for a deeper slide, its right for that.

Q: You are bearish on Adani Enterprises as well today?

A: I am bearish on it for a long time. It keeps falling; it doesn’t stop and makes these new lows repeatedly. Though there must be some good reason for it but all we see is the charts and the consistent weakness in it tells us that it’s going much lower. Stocks that don’t stop have a message - they are going down. There is a very mild modest target on the downside at Rs 258 but that’s not the end of this decline. It’s going to go much lower.

Q: The last one from your buys is HDFC Bank this morning?

A: HDFC Bank has been an outperformer. In any case I am very wary of selling HDFC and HDFC Bank. I prefer not to short them because whenever the index needs to be pulled up, these are the two stocks that are favourites for index management on the upside. So if the market is to go up today or tomorrow, HDFC Bank I assume would be leading that rally.

HDFC Bank - the charts say it’s outperforming the banks and surprisingly outperforming the Nifty. So because we are in a mildly bullish environment, HDFC Bank is an ideal stock to buy today.

Q: Looks like the pre-opening was flat. What kind of trade would you like to initiate?

A: We are in a very narrow and tight trading range. Inside that range there is no trade. But we are going to breakout or breakdown. We will do one of those things. I would be taking a long position if the Nifty crosses 4,770. Why 4,770 and not 4,800?

Because 4,770 was the resistance for the last two days - that’s the approximate level so that’s the point at which I would take a buy. Somewhere below 4,720 would be a short selling level. There is a 50 point no-trading range. Above 4,770 I will build on my long positions which means I will start with some volume and if the market then decides to go up, I will keep on adding, pyramiding it.

Q: Couple of bank checks - SBI and DCB ?

A: Surprisingly, banks are all coming as buys but then not so surprising because the market has some mildly bullish momentum. SBI is a buy. In fact if the market decides to go up, today’s statement could easily be a major participant. So on SBI, we could look at a target of Rs 1,740 or so. The important thing is to keep tight stops because if this is not going up, we don’t want to remain in the trade. DCB went up with a gap yesterday so look for a target of Rs 36 and go long.

Q: A quick check on some of these largecap names like Hero MotoCorp and HCL Tech and how the charts could be looking there?

A: Hero MotoCorp charts are now in a correction so we want to sell it and certainly not buy it now. HCL Tech is a buy. Yesterday, it went to higher levels, retreated but that momentum should continue on the upside.