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May 04, 2012, 11.14 AM | Source: CNBC-TV18

Nifty may breakdown, short on rally: Sudarshan Sukhani

Sudarshan Sukhani of s2analytics.com says, the Nifty is coming down. "Trend is down. Short on any rally," he advises.

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Nifty may breakdown, short on rally: Sudarshan Sukhani

Sudarshan Sukhani of s2analytics.com says, the Nifty is coming down. "Trend is down. Short on any rally," he advises.

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Sudarshan Sukhani (more)

Technical Analyst, s2analytics.com | Capital Expertise: Equity - Technical

Yesterday, the Nifty and Sensex dropped nearly one percent each. The Nifty closed below 5,200 mark on the back of weak rupee. The Sensex closed at 17,151.19 down 150.72 points.

Sudarshan Sukhani of s2analytics.com says, the Nifty is coming down. "Trend is down. Short on any rally," he advises.

According to him, the market is on the verge of a breakdown.

Also read: Rada Advisors bets on 18-20% growth for mid-caps

Below is the edited transcript of his interview on CNBC-TV18. Also watch the accompanying video.

Q: It’s looking more like the market is grinding down to 5,000 base. Is that the approach a Nifty trader should take this morning?

A: Yes, that is the approach. For all of the last week that is what I had suggested that the market is coming down. Now, the pace of the decline has to be decided by the market itself, sometimes its fast, sometimes described as grinding. But the trend is down. Today’s view should be that any rally, any breakdown should be use to build-up short positions, if not already done. 

Q: Would you be disappointed if the Nifty closes below yesterday’s closing levels because the Nifty performance over the past two weeks intraday, did dip to levels of about 5,150 but haven’t closed below 5,188? So a closing below what level on weekly basis will be extremely disappointing for the markets?

A: I am not sure because I am short in the market. I would be thrilled if the Nifty were to close below 5,188 on a more sober note. The market is on a verge of a breakdown. Roughly 5,180 is the low that have held on to for the last seven days; the Nifty has come to 5,180 and bounced back.

So a close below 5,180 tells that the Nifty has broken down from a support and also closed below that support level and it is not just an intraday breakdown. But to my mind that’s just a matter of time. If that doesn’t happen today, it will probably work out on Monday. I am not very keen to take long positions even if the Nifty were to recover and stay above 5,180. The trend is still down.

Q: You would be a short on ICICI Bank today?

A: Yes, ICICI Bank rallied, Rs 900 has become lot of resistance for it. It backed from Rs 900 and now the chances are its going to break Rs 840 levels. Intraday targets are slightly different, it is Rs 830 for intraday. Once that breakdown happens, we can expect it to go below Rs 800.

If the Nifty falls and it should, it’s not going to fall alone, all its components will also go down.

Q: Jet Airways was under pressure yesterday and do you think that has more downside pressure?

A: Yes, more downside pressure and it was also a sell yesterday. Jet Airways’ eventual target is Rs 278. It has made a bearish pattern and the chances are that it will go below Rs 300 and come down. That’s not the target for today. Today’s target is whatever the market gives you but it’s a positional short in Jet Airways and not just for intraday.

Q: Financial Technologies is showing significant downside risk?

A: Yes, Financial Technologies is showing a pattern which suggests a target of Rs 620 at the minimum and that is a short-term target. My sense is that it will reach Rs 500 eventually. It doesn’t come on the list because it’s no longer an active stock. Multi Commodity Exchange (MCX) has branched off and trader interest is no longer there. But if we see this big decline coming and not to forget that it has fallen from Rs 900 to Rs 600 already, so the trend is down. It’s cracking Rs 600 and going much below.

Q: DLF is a sell today?

A: Yes, I have been downbeat on DLF because DLF rallied a month ago. It found lot of resistance at Rs 205-210 area. It couldn’t cross that and that gave the message that these rallies are relief rallies and the trend is down. Yesterday DLF fell after a three day rally. That three day is the maximum that a correction takes place, so we can assume that DLF’s downtrend has started, Rs 180 could be an immediate target but eventually DLF should revisit much lower levels. 

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