Nifty may go below 5600; short on rally: Sudarshan Sukhani

Also Read: Nifty has support at 5680; buy on dips: Angel Broking

Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Sonia Shenoy.

Q: How would you approach the index today?

A: Yesterday, I had suggested that we will probably see some dip. That dip has come about. We are looking at a correction, this is not a downtrend. Corrections are not straightline declines. So, I would expect two-three days to be a little choppy and probably make an attempt to go towards 5,800 again.

I am assuming that the Nifty will go below 5,600 sooner or later. So, any rally should be used to take short positions. That would be the positional trade. Intraday, ofcourse, you go with the flow of the market, it could be up and down.

Q: Yesterday we saw some correction in the public sector banks. Is there more downside to names like Punjab National Bank ?

A: Yes, there is. What has happened was the public sector banks rallied spectacularly. In fact, that rally was one of the best in the banking sector, in the larger universe. That seems to be over. If the Nifty rallies today, goes up today, then maybe the inevitable, which means the decline in PNB will be postponed by a day or two days or maybe it can still keep on going down.

But, public sector banks are now at the top of their trading range, top of their rallies, they have given clear distribution signals. So, PNB is now a sell. I am again explaining that today may not be a good day for intraday selling but any rally should be used to create short positions. Luckily, you can buy puts, you can sell calls, sell futures, do a lot of things here.

Disclosures: I have no personal holding in any of the stocks discussed.