Apr 18, 2012, 12.11 PM | Source: CNBC-TV18
Sudarshan Sukhani of s2analytics.com believes the Nifty is all set to break its 100-point trading range and move above the 5300 level.
Sudarshan Sukhani (more)
Technical Analyst, s2analytics.com | Capital Expertise: Equity - Technical
“For now, what we are doing is taking up the trading opportunity that we have and setting it up on the long side,” he said in an exclusive interview to CNBC-TV18.
However, he adds that a strong buy signal emerges only once the 5400 level is broken.
Below is an edited transcript of his interview with Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.
Q: After yesterday’s rally, do you see more potential for upside?
A: It is anybody’s guess. Chances are that that the market takes out that very narrow range of 100 on the upside today and the Nifty is likely to be above 5,300. That is a buy signal. So rather than make an estimate of where the Nifty is heading, what we are doing is taking up the trading opportunity that we have and setting it up on the long side.
Once we cross this 100 point range on the upside, we have then the 5,400 barrier for the Nifty. A real buy signal emerges when we cross 5,400. For all I know, we could do that and we are going to be long. But for this point, it is very difficult to make a call.
Q: Power Finance Corporation (PFC) did quite well yesterday; you think it is good for a buy?
A: I think it is good for a buy because it is also making a fairly decent bullish pattern and it corrected from Rs 250 and came down a lot. So there is a lot of headroom even to reach its earlier highs. With regards to financials, we had banks coming on the buy list and that now seems to be working for non-banking financial companies (NBFCs) and others.
PFC’s chart suggests that a position trade for even a day trade is worthwhile. There is limited downside and the first target of Rs 205 and then if that is broken then a significant rally could come about. So it is a buying opportunity.
Q: What about something like a Dish TV ?
A: Dish TV is a buy on dips trade. We had a very big decline after an initial rally, then again a rally and then a decline. I am assuming that the rally is intact and the decline was a correction in what is now a new uptrend. If that was a correction, then yesterday it saw good gains and the chances are that slowly inch-by-inch, Dish TV is going to cross those levels and then move higher. It is probably going to go to Rs 68 then cross and touch Rs 70 level and if it crosses Rs 70, it is in a very big bull trajectory.
These are all assumptions but we buy on assumptions and probability. This is a good location because we are buying after a correction, so we are buying at a very low price; I think Dish TV is a worthwhile trade.
Q: How about some of the quasi realty stories like Bombay Dyeing ?
A: Bombay Dyeing has been a favourite. It went through a very mild sideways correction. It did give up a few points but that was very negligible. After that it rallied yesterday, the chances are that strong stocks keep on rallying. We have the example of Bata, which just doesn’t stop, although it is not exactly the same but similar. Now with Bombay Dyeing the chances are it is going to make those new highs for this uptrend. It is in a bull market so it is likely to make new highs in a bull market. It is an out performer and has been making new highs consistently, so I think now Bombay Dyeing is ripe for another buy and another breakout.
Q: What is your view on HDIL ?
A: We have spoken of HDIL earlier and I explained that it was in a trading range and it was coming out of that range and therefore it was worth buying. It was probably one of the better stocks in the realty sector in terms of charts. That seems to be working out for HDIL. It has come out and has come out of the range on the upside with a lot of momentum. When stocks are in a trading range and they come out of it with good momentum that is not the end of it. That momentum is probably telling us there is more to come on the upside.
There has been a very decent decline from Rs 125 to almost Rs 80-85 for HDIL. There is a lot of headroom for HDIL to go up before it encounters resistance between Rs 90 and Rs 125. So I would say that for intraday traders also you keep track of HDIL and go long whenever you get these intraday opportunities and it is a long candidate for position traders and swing traders.
Q: From the banking space, you continue to back Axis Bank ?
A: Axis Bank has a relatively better chart than ICICI Bank and HDFC Bank . For the last four-five days, it is finding support at that lower level of Rs 1,160-1,170 and bouncing back from there. That usually suggests that a small base has been formed at the lower end and the next bounce should take it back to Rs 1,250 and probably that is a good trade for the short-term trader. We will see what happens after that but there is some money on the upside. For a stock like Axis Bank, the risk on the downside is limited if the market is going up. It is a good trade to be in and you could probably get Options also here.