Sudarshan Sukhani's top 5 picks for trade today

Technical Analyst Sudarshan Sukhani’s top five picks for today’s trade include Cairn India, Cipla, Suzlon, Axis Bank and Power Grid. He advices the investors to buy all these stocks.

Here are the key levels to watch out for:

Buy Cairn India with a target of Rs 275 a share and a stop loss at 255 a share

Cairn is a buy because the stock is now moving in a trading range, and given the background of crude, I would expect it to breakout. Since this market is a little cyclical in nature, it picks up a sector, moves it up then picks up another sector. Cairn is ripe for a breakout. So today I would be watching that stock and probably trading in it.

Buy Cipla with a target of Rs 272 a share and a stop loss at 258 a share

Cipla is another story. It is in a trading range but Ranbaxy’s trend has done a very good job. I would assume that Cipla can also catch up. So the key here is that these are stocks that have not moved for the last few days. Therefore simply because of the rotation process, they can now come into play.

Buy Suzlon with a target of Rs 105 a share and a stop loss at 97 a share

I like this stock and that is after a long time because Suzlon has been a disappointment. But it is now holding on to its support levels and it does appear that—this is all about momentum, it is not about fundamentals—it is not about any other news. So this is a stock that has not moved up. Here it is, it is ready. It made the right moves yesterday telling us that maybe another period of gain can be coming in.

Buy Axis Bank with a target of Rs 975 a share and a stop loss at 890 a share

My stop loss on Axis Bank is about 18 points away from yesterday's close. I wouldn't know if it is far away but that is the minimum. The idea is that the targets are much higher which means that Axis Bank has not rallied while the other banks were moving up. If it catches up, we can expect a move which takes it to its previous resistance Rs 975; if it doesn't, we get out for a very small loss. So it is a decent risk reward trade for us. 

Buy Power Grid with a target of Rs 111 a share and a stop loss at 106 a share

Power Grid pops up in my list now and again. The stock is not doing anything for the last one and a half months now, so that is very unusual for a share in this bull market. It is not falling either then we would not put it here. So the idea is that once it makes a move, it will make a significant and substantial move. So this is a trade which is a probing trade. Is it going up today or tomorrow, if it is, it will give us a big ride.

Here is a verbatim transcript of the exclusive interview with Sudarshan Sukhani on CNBC-TV18. Also watch the accompanying video.

Q: You have got anything on the charts which says which way we are headed and what if we do crack, is it going to be significant because we have to deal with the future side of it and if we don’t crack then could we have a significant upside which means another 100-200 points because that is what the put side of the market seems to be indicating?

A: It is not easy to say what the markets will do tomorrow but it is easier to say what the traders should do for the next two days i.e. today or tomorrow. The trade is primarily on the upside which means you either buy calls or sell puts or buy Nifty futures and expect that this market could touch 5,100 also. The lowest level to which the Nifty can go without disturbing this trend is 4,920. So till then the trend is the same, you still buy on dips.

Q: You talked about rotation; could you tell us what two-three sectors or stocks you see strong momentum in next two-three days, doesn’t matter what they are, what they do?

A: Primarily stocks that have not run up in the last few days are the ones that should be in the picture today. I did give you five stocks. Rather than looking at sectors, I am looking at stocks inside a sector one of which has run up and the others have not. So broadly the theory should be that avoid the ones that are moving up or that have moved up yesterday for example a Natco Pharma moved up yesterday, don’t touch it today. Look at the ones that are slipping.

Q: Two quick chart checks for you, Moser Baer that was up nearly 9% in trade yesterday and from those real estate stars that we were talking about, Orbit , that has rallied more than 20% in three days now?

A: Moser Baer is coming out of a very large trading range. We have talked about it earlier and it is doing all the right thing. So I would expect an initial target of Rs 110 but probably much more as it slowly develops steam. So that is a stock that you want to trade and own.

Orbit is something that you want to avoid at all cost, no matter what it has done in the last three days because it is coming close to significant resistance, so just stay away.

Q: What do you think about Mphasis that was up nearly 6% in trade yesterday? 

A: IT has surprised by moving up while I thought it would underperform. It is not doing that. That tells us that there is lot more steam left in the broad sector including Mphasis which has been an outperformer in the IT space. Don’t buy it today, wait for a correction but the chances are that the Mphasis is going to surprise us on the upside.

Q: How would you approach trade from hereon, it is holding above 5,000 but it is very hesitant this morning?

A: Yes but you cannot go and sell this market. So there is only one way to trade it i.e. you still have to buy it because we are just two days into expiry, you can as well buy a 5,000 call. Either you make money on it or it just finishes with zero value. This is not a market that you short sell.

Q: Sugar trend seems to have completely broken down, should you sell sugar?

A: Yes. Earlier also I thought that the intermediate tops in sugar has been made and now sideways move is going to happen. It will go up a little, come down a little and essentially do nothing at all. So if you own sugar stocks, you might as well get out and get in some of the other infrastructure or banking plays—always buy on dips.