Nifty resistance of 5250 to hold; look to go short: Sukhani

In an interview to CNBC-TV18, Sukhani points out that the resistance of 5,250 on the Nifty has held, and therefore we may be in for a slide now. “For the last two days, I am open to seeing the Nifty slide down and that seems to be the more likely scenario now. The slide could be slow, but it will be painful,” he said.

He further adds that the market is forming lower highs, which is also indicative of downside.

Below is an edited transcript of his interview with Udayan Mukherjee and Sonia Shenoy.

Q: What would your strategy be getting into the trade today?

A: For the last two days, I am open to seeing the Nifty slide down and that seems to be the more likely scenario now. The slide could be slow, but it will be painful. It can always reverse if some news comes about, but my worry is that this is a market that’s depending on news to get a bullish outcome and that’s not good. Bull markets go up anyway; they do not need news to push them up.

So charts are now telling us that 5,250 has held, that resistance has not been broken. We have a clear pattern of lower highs, 5,600, then 5,350 and now tentatively 5,250. So the strategy today is to search for opportunities to go short in the Nifty.

Q: You have Oriental Bank of Commerce (OBC) in your sell list today?

A: There was a big run in OBC and I thought this is it. Even then I was not upbeat. Now for the last two days OBC is sliding slowly. I am assuming that this slide will now accentuate, it will become much more on the downside. One day of a rally is not enough after the big bear market in OBC; public sector banks have not bottomed out. So, OBC is a perfect candidate to sell.

Q: You think Coal India has stopped out for now?

A: Coal India has made a visible distribution pattern. It’s breaking down from it. I do not think that Coal India is going into a bear market. But it is suggesting that a deep correction is likely. So, it’s good news for investors. If the corrects one would want to buy it.

For traders there is a trading opportunity on the short side. If one waits patiently then the targets are Rs 320-325. The targets for day traders are much shallower but they are on the downside. Coal India is coming down and that is very visible on the charts.

Q: You are shorting Tata Steel today from the metal space?

A: Tata Steel’s rally from Rs 380 to Rs 410 was a bear market rally, a relief rally after the big 100 point decline. That rally is over. For the last two days it’s falling. Metals are generally underperforming across the board in India at least.

So, Tata Steel is a short sell. Its eventual targets on the downside could be Rs 350-360. With every passing day my sense of bearishness is increasing. I hope I am wrong and the market proves me wrong but Tata Steel is now only a sell.

Q: Would you sell Mahindra & Mahindra (M&M) as well?

A: Mahindra & Mahindra was a short sell a couple of days back also. It is making a bearish head and shoulder pattern. I do not know what the message is and why it is suggesting of going down much lower. But it’s worrying.

For short-term traders we won’t think about the larger picture in M&M which suggests that target of Rs 600 but for the time being it is a sell at every opportunity since markets may remain weak today, on Monday. My sense is it’s a short sell.