Nifty to slide to 5100 under selling pressure: Sukhani

The indices were trading in a tight range the past few days, but a close below support levels indicates that further pressure can be seen, Sukhani told CNBC-TV18. “We will have choppy conditions, we will have some relief rallies, but the trend is unlikely to change,” he added.

He further adds that the Nifty is headed towards 5100-5150, and therefore advises traders to short sell the index. “The idea is to use Nifty puts rather than naked Futures to build up short positions or to continue with existing short positions,” he said.

Below is the edited script of his interview with CNBC-TV18’s Udayan Mukherjee and Mitali Mukherjee.

Q: How would you trade the index after yesterday’s cut?

A: The Nifty finally resolved a trading range by closing below support levels. We have been saying that Nifty is in a narrow range and it’s either going to breakout or breakdown and we just need the patience for the index to decide its way. That way was decided yesterday, because it was very clear that the Nifty is going to open lower and remain below support levels.

Nifty is now a short sell, and I would expect it to remain under pressure. We will have choppy conditions, we will have some relief rallies, but the trend is unlikely to change. My targets for the downside are between 5,100 and 5,150; it can slip below 5,100 or stay a little above it, but there is money on the downside and this correction is probably tradable by most traders. So the idea is to use Nifty puts rather than naked Futures to build up short positions or rather to continue with short positions that I already have.

Q: What do you see on the Bank Nifty?

A: The Bank Nifty has been an out performer. On the long side we were long on the Bank Nifty, long in a variety of banks suggesting that this is a sector which should do well, that has happened. Even as we see the markets suddenly take a U-turn on the downside, the Bank Nifty continues to outperform, in the sense that is has fallen the least, that pattern is likely to continue.

So while it makes sense to go and short the Nifty, it makes sense to sell the CNX IT. I think its wise to avoid doing any trading in the Bank Nifty, it is better to sell individual banks which are weak and relatively and let the Bank Nifty be left alone. So I don’t suggest a trade here. A trade is better in some of the banks.

Q: How would you trade the IT stocks this morning?

A: IT stocks were disappointing even before Infosys results. We had sell on Wipro and HCL Tech and my sense is that there is much more downside left before this sector completes its downtrend. Once momentum starts on any side, up or down it continues and in case of IT momentum is very clearly on the downside.

So all of a sudden like a switch these declines will not stop, they will take their own time and then they will also build some bases even before they even think of going up, that’s some way ahead. So there is a short selling opportunities in most IT stocks as well as in the CNX IT index.