Only 3 out of 12 stocks worth a buy; L&T can rally: Sukhani

In an interview to CNBC-TV18, Sukhani says that there may be a 70-80 point gap down this morning, which will be the cream of today’s move. “For those who are already short, today is a good day, so don’t look to cover positions,” he said.

Below is an edited transcript of his interview with Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.

Q: Looks like a gap down, how do you trade it?

A: Yes, looks like a gap down. For those who are short, today is a good day; I do not see any necessity of covering short positions today. But for those who are looking at intraday trades, there are not going to be many intraday options.

We are going to gap down by 70-80 points, which will take much of the cream of this move. Even day before the intraday moves after 80 points gap down were not anything to write home about. Today it is possible that the same thing may happen.

If at all a bias is needed, it is on the downside. It is possible that there maybe a rally, it’s also possible that after 80 point gap down the Nifty could go down another 50 points. So the view remains bearish; the trade should be on the downside if there is an opportunity.

Q: Is there more downside in Voltas ?

A: Yes, it’s on the verge of breaking down again which I assume it will today. So Voltas represents another short selling opportunity. It’s a pity that some of these good stocks have cracked down. There are downside targets which are much lower but for the time being we look at 3-4% decline but eventually it should reach much lower levels.  

Q: Do you think Hindalco is also headed towards double digits?

A: It is. We have discussed Hindalco and we had suggested that it is moving towards double digits. A short selling idea in Hindalco is valid. The target was Rs 102-103 but today’s gap down could change that. Traders need to adjust the stop loss and the target accordingly. It’s heading towards double digits. I own shares in Hindalco.  

Q: You have a sell call JSW Steel ?

A: Yes, JSW Steel has been a disaster. It had some significant support levels at Rs 675. I have referred earlier to so many companies which have broken down support levels from the charts and same thing here, Rs 675 has been cracked. The current target for this decline is Rs 560 and that may not be the end of the down move.

Q: How about an IDBI Bank from the financials?

A: IDBI has been a big disappointment. It never participated in the banking rallies. It was an underperformer. It has gone below Rs 100. It’s now staring at a target of Rs 82 in the short-term. It’s a short sell. It cracked from significant support levels so Rs 82 maybe a short-term target but if this carnage continues that won’t hold.

Q: Mcleod Russel (India) is a buy in your list?

A: Mcleod Russel is a good chart and after the correction which we saw three months back it’s in a trading range but it’s repeatedly pushing upwards. So I wouldn’t be surprised if it outperforms and breaks out. Even now there is a 4% gain possible because there is resistance is at the Rs 287-290 levels and a rally to that is quite easily achieved. Once it breaks Rs 290 we are looking at new highs. So this is a stock that one needs to buy and luckily one could get it lower today.

Q: You are bullish on Ambuja Cement ?

A: I think there is a buying opportunity here and if we have a gap down, its all the more reason to buy it. It is in a tight trading range for the last 15-20 days. Yesterday it broke out of that range and there is some momentum on the upside. So it’s a buy.