Nifty may decline below 5000, sell on rally: Sukhani

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Nifty may decline below 5000, sell on rally: Sukhani

Yesterday, the Nifty tested 5,000 levels before closing at 5,030 and the Sensex lost over 100 points to close at 16,775. Sudarshan Sukhani, technicaltrends.com says, he is not keen on trading the Nifty now. According to him, the decline below 5,000 could come, but it won't come smoothly and easily.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by Sudarshan Sukhani See what other Experts & Brokerages are saying about Exide Industrie See messages about Exide Industrie Exide Industrie BSE | NSE 29/05/12 Are Mutual Funds betting on Exide Industrie? Other Stocks in this news Gujarat Mineral Development Corporation | Sun Pharmaceutical Industries | Nestle India | Alstom Projects | Hindustan Unilever | GVK Power & Infrastructure | Yes Bank | Delta Corp | Coal India | LIC Housing Finance |

Yesterday, the Nifty tested 5,000 levels before closing at 5,030 and the Sensex lost over 100 points to close at 16,775. Sudarshan Sukhani, technicaltrends.com says, he is not keen on trading the Nifty now. "I expect it to be choppy," he adds.

According to him, the decline below 5,000 could come, but it won't come smoothly and easily. He advises investors to sell on rally.

He further says, he will short if the Nifty breaks 4,950.

Don't miss: Is the gloom in Indian markets for real or overdone ?

Below is the edited transcript of his interview with Udayan Mukherjee and Mitali Mukherjee of CNBC-TV18. Also watch the accompanying videos.

Q: Everyone is expecting the inevitable break below 5,000 today. If that were to happen, as an intraday trader, how would you approach that fall?

A: I am not very keen on trading the Nifty because I expect a lot of choppiness. The decline below 5,000 could come, but it won't come smoothly and easily.

The best way is to sell on a significant rally like yesterday we saw a rally of 70 points. Even if that doesn't come about, wait patiently for an intraday rally and then go short. That's the strategy.

If a rally doesn't come about and the market simply keeps on sliding then I have a level 4,950. If it touches and breaks 4,950, that's a safe selling level. I won't question what the market is doing, forget the choppiness and go short. So, these are the two ways in which I will be trading today.

Q: What is your take on Exide Industries ?

A: At Rs 190-180, Exide was a dream; everything was going well for it. Now at Rs 115, it now appears that the downtrend that started is actually a bear market, it's not a correction.

Exide yesterday fell. The chances are that it's going to break Rs 100 and go below it. Why are the midcaps doing that? I cannot answer. But for Exide there is a short sell at current levels, keep a tight stop loss, and go ahead and look for a significantly lower target. Intraday trader should accept whatever comes. But positional traders can look to go below Rs 100.

Q: What about GMDC ?

A: GMDC is a different story. It's not in the same league as Exide because GMDC is not in a bear market. But it has made a double top, at Rs 190 that double top got confirmed. It's now on the process completing the downside pattern, it's in a deep correction.

A deep correction is a good trade on the short side for traders. Therefore, GMDC because of its double top, and the fact that most stocks are likely to go through correction is a short sell.

I think there is a lot of cushion on the upside. If you keep a stop loss, I don't think that will be triggered. We can look for initial target of Rs 155 for GMDC that's not intraday, but eventually.

Q: Pharma stocks have been relatively resilient? Would you sell something like Sun Pharma this morning?

A: Yes. Sun Pharma not only fell yesterday, it's been falling for the last three days. Normally after three days of decline the stock should recover. I don't see that happening today for most of the market.

If Sun Pharma were to break today then we are seeing a breakdown from a narrow trading range. It was already in a range, it did not participate in Dr. Reddy's, Cipla rally. So, once it breaks a range, we are looking at a fairly decent downside.

I must warn you, like GMDC, Sun Pharma is something that we are selling because of an anticipated correction. It's not in a bear market. When you are selling corrections, you need to take profits and get out.