Sudarshan Sukhani of s2analytics.com tells CNBC-TV18 that in the very short-term, upside targets were a test of 5,630 but itís not an exact number and could be in the 5,600 or 5,700 zone.
Sudarshan Sukhani of s2analytics.com tells CNBC-TV18 that in the very short-term, upside targets were a test of 5,630 but itís not an exact number and could be in the 5,600 or 5,700 zone. That target remains intact, so he doesnít see it going much higher than that.
The market, he finds is in a cheerful mode so the important point is to remain long partially. Yesterday, he had suggested that at least 60% of the position should be taken out and profit should be taken on that.
ďThis morning in retrospect it may seem that this was not a good idea because the SGX is suggesting higher levels but our tests have told us repeatedly thatís its wise to stay with low volumes on volatile days,Ē says Sukhani.
So if there is a consolidation or intraday movements, go add to your long positions otherwise continue with whatever you have, is his advice.
Below is an edited transcript of his interview. Watch the accompanying video for more.
Q: Lots of longs in your list today so letís start with textiles - Raymond ?
A: Raymond made the big move. It made a second day move and now a third consecutive day of significant move. In that process, it has made a new high for its bull market currently. Itís broken a lot of resistance levels and there is more money on the upside. If today Raymond consolidates, itís wise to go and buy it because itís not necessary that after a three-day move it will stop. The breakout from resistance tells us there is more upside here so Raymond seems to be not only a short-term buy but on a dip suddenly a position trade also.
Q: CESC is in your buy list today?
A: CESC is a stock that has made those new highs in this bull market. The fact is that it went through a short correction, crossed the previous high that it had made in February and that tells us there is probably more upside and there is lot of headroom here. The stock was at lofty levels a couple of years ago. So if CESC is willing to go up from Rs 300 it could go to Rs 400 where the first resistance is encountered. I am not saying thatís going to happen now. My point is there is more upside here and itís a stock that should be bought today as also for the short-term.
Q: Maruti is a buy too?
A: Yes, Maruti was in a trading range for a month almost. Yesterday it broke out of that range on the upside. In the process it also made a new high for this bull market but for Maruti the new high is not as important as the fact that it came out of a trading range decisively. It seems Maruti has much more upside here. Itís been moving up since Rs 950 and a point can be made on how much higher it can go.
We know the answer to that that it can keep on going higher at least. Itís a blue chip stock to trade in. So the breakout from a trading range tells us that we should be looking at higher levels. There is volatility here especially for auto stocks in the Budget so traders should take care of that. If you get a big gain donít wait for it, just take profits.
Q: Why have you picked a high beta stock like Reliance Communications ?
A: Reliance Communications is a better stock to trade in the universe of ADAG stocks and I have repeatedly said that. Reliance Communications has not made the new highs that I am talking about in this bull market but it was in a trading range for a month and itís broken out of that range. It still has to go to Rs 110 and if it crosses that it will make those new highs. I think that should happen.
With ADAG stocks you donít know what goes on but since this is the only preferred stock in that group making the right technical patterns and breaking out then there is a buy opportunity here. Reliance Communications in any case after this breakout yesterday itís certainly an investment idea. Anyone who buys it will make money in the next couple of years.
Q: The only sell in your list is Fortis ?
A: Yes and thatís because I thought let me not get overboard with all these buy opportunities. I maybe will track it but when the market is roaring on the upside there is no need to go short as thatís more of an academic interest. Fortis has made a big rally; itís now broken down from a support level so maybe it will go into a deeper correction. There is money on the downside here but itís futile to go short when the market is so strong on the upside, so its there but I wouldnít be taking this.
Q: A buy on Alstom Power as well?
A: Thatís an interesting stock. It went through a bear market after seeing a rally then faced a lot of adverse news and it seem as if the company is going through a slump and good companies donít do that. Alstom is now telling us that the bear market is over. Itís moving up in a very nice classical fashion, higher highs-higher lows step by step and not running away.
So APIL is a buying opportunity. Itís quite possible that not only in this Budget but subsequent to it things may work out and we could see APIL catch up with its other capital goods peers. For me itís an investment idea and today I will be keeping a close track of this. This is one stock that should move up if not today in the next few days.
Q: We have been talking a lot about the bank Nifty. How would you approach trade on that?
A: The bank Nifty has been an outperformer and the trade there is to buy it on a consolidation, buy it on an intraday dip which is the trade for the Nifty also. The problem for people who donít have positions always is what happens when there is a big gap-up? Then you wait patiently for intraday consolidation that inevitably occurs and try to go long. Just keep volumes low because volatility usually doesnít reward traders.
Q: If you do get a 1% gap for people who either donít have enough longs or took profits yesterday, should they buy on the gap-up or wait for a big intraday dip?
A: No, they cannot buy on a gap-up, itís not the first gap itís the third one. They have to wait for an intraday dip but any attempt to add positions means that you have to wait for an intraday dip or a consolidation. Sometimes that consolidation substitutes as a dip but there must be some signal for buying, if not, we are content with the lower volumes that we have and that is what the traders should do. There is no sense in rushing to buy at the open and then seeing significant draw downs during the day and tomorrow and day after thatís also possible.
Q: One of the stars yesterday was GMR . What kind of targets can you work there?
A: There was a time when IT was considered to be high beta and now IT is considered to be defensive and infrastructure is considered to be a high beta sector. GMR has a target of Rs 37 or so and I wouldnít be surprised if it reaches there. Itís a complete speculative play so traders must understand that if it doesnít work out they should exit almost immediately.
Q: Another one from the same space - IVRCL ?
A: Same thing. These things are going up and itís true that they corrected a lot. They were in deep bear market so I suppose itís justified that some bounce is expected. One can look at a target of Rs 62 that maybe will cross it. These are pure momentum plays. There is no chart pattern that suggests that higher levels are possible, momentum is favouring these stocks so traders should stay on the right side of the momentum, try to buy them on dips, on consolidations, breakouts and understand that this whole thing can stop almost anytime.
Q: Are you seeing signs of any breakout on Reliance ís chart?
A: No, Reliance is a in a trading range between Rs 750 and Rs 850 and the chances are it will remain in that range. But at current prices there is some upside, it can go to Rs 850-860 approximately in that zone so there is some upside possible in Reliance and it could make sense to trade Reliance as a surrogate of the Nifty.
Q: How is Arvind ís chart looking?
A: Arvindís chart is mildly changing from a deep correction outlook to something that could consolidate but Arvind is not a recommended buy. There are many other stocks so purely on charts I would say this is not a market where you want to sell anything. I would rate it as one of the lowest in the sector.
Q: What about Suzlon ?
A: Suzlon is a much better chart. Itís gone through all the trials and tribulations, gone to Rs 18; the rally itself was tempered by many corrections in between and that is a good sign. I would be upbeat on Suzlon but that doesnít mean that you buy in the morning after a gap and make money. It means Suzlon should be on the buy list as it is and Rs 32 is the target and it could safely cross that slowly and steadily.
Q: What about PFC?
A: Everything is a buy today but the problem is that PFC is not a recommended buy and thatís the only way I can qualify it. The corrections we saw in PFC and REC were very disappointing for anyone buying. So I would say stay from it. If for example somebody is a PFC freak then you have to buy it when you cannot go short but ideally you donít want to trade these two stocks on the long side because banks offer much better opportunities.
Disclosure: I have no personal holding in any of the stocks discussed.
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