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Nov 02, 2011, 04.11 PM IST
Sudarshan Sukhani, Technical Trends expects Nifty to test 5,400 levels sooner or later and successfully cross that mark. "First resistance comes at 5,400-5,420 levels and this 100 points rally should come about unless something catastrophic happens again in Europe," he said.
Sharing views on stocks across various sectors, Sukhani recommends buying Bata and Bajaj Auto , he believes that these stocks offer a good buying opportunity. However, he says that one should avoid stocks like Jain Irrigation and Hindustan Motors .
"Oil and gas in any case is not one of the favoured sectors of whatever the current rally will give. That should be IT," he added.
Below is the edited transcript of Sukhani's interview with CNBC-TV18. Also watch the accompanying video.
Q: For a very short term outlook in terms of the upside what kind of levels would you watch for where the market would close and signify to you that there is still inherent strength in the system?
A: If we close higher than yesterday and maintain current momentum that itself tells us that the market has gone through a two day correction and that correction is now over. So thatís the first step towards higher levels.
I am assuming that sooner or later we should go and test 5,400 levels again and may be successfully cross that hurdle. First resistance comes at 5,400-5,420 levels and this 100 points rally should come about unless something catastrophic happens again in Europe. We have already discounted a lot of this in India and we are not worried. So 5,400 seems to be a target and initial resistance.
Q: Is it a good idea to start buying now in that case or is there too much volatility and you would wait for that to subside a bit before taking that call?
A: In the morning I disclosed I had long positions and had explained that I would add to them and buy futures. Instead of futures I have added 5,300 calls to my position just as the market went on going up. It is a good idea to buy 5,300 calls at current levels rather than go for futures. The moment you buy options you remove a lot of volatility from your trade. So that should be good enough.
Q: Considering that you are buying, are there any picks in the midcap space because today's its doing well but the October rally itself, the broader markets have underperformed is there anything thatís ticking out there for you?
A: Bata still remains a buying opportunity today in the midcap arena. Whenever it pushes, it is going to make those life time highs so if one has the patience for a day or two days it is worth looking at.
Q: If I can just pick out Jain Irrigation, thatís seeing a lot of weakness today. It also had a bad month. How are you looking at that stock in particular?
A: Itís horrible, the charts are terrible. At Rs 170-175 we thought the worst is over for it but then it went on sliding. Now there is no question of calling a low for Jain irrigation. Today its down and its down in a market thatís relatively cheerful.
I wouldnít touch it on the long side. There should be no buying, no catching of falling knives. I donít think there is a short trade here because itís fallen so much that we donít know if we could see a quick rally or some kind of stoppage of decline. Just avoid it but please donít buy.
Q: Hindustan Motors has been quite active today. Did you get a chance to look at those charts?
A: I donít track Hindustan Motors. The reason I donít want to discuss it is that people will start buying or selling in it or rather buying in it. Itís not a good idea. We have seen Hind Motors do a lot of things; come down from Rs 100 to Rs 10. It is best to avoid it no matter what its doing today still itís avoidable.
Q: There has been relative resilience in some of the two-wheeler faces and stocks like Mahindra and Mahindra (M&M). How do you trade something like a Bajaj Auto after the gains it put through in October?
A: You buy it now even as we speak. Today Bajaj Auto has rallied after a three days decline. Thatís what a good bullish stock does. There are three day corrections and on the fourth day it starts to rally. It is doing all the right things today.
So, I would say Bajaj Auto is a buying opportunity, look for it to cross Rs 1,800 levels. There is a suggestion, when one gets these blue chip buying opportunities like Bajaj Auto is giving today, donít take day trades in them, donít take Rs 10-20 profits, wait for a bigger run and I think that will come.
Q: The infrastructure pack has taken such a beating but Reliance Infra has been on quite an uptrend of late. Is it perhaps a time to buy into Reliance Infra?
A: A little bit of patience is required. It is making a wonderful bullish pattern and that is the reason I am broadly upbeat on the market. Any number of stocks are giving those bases and suggesting immediate break outs. Reliance is doing the same thing. I would prefer to wait a little and see whether it can cross the Rs 480-485 levels.
Thatís not very far, itís about Rs 30 higher. Its always better to buy after a break out is confirmed. But for somebody who is impatient, some small nibbling, buying in small lots can take place even now in anticipation of a break out. But the charts are suggesting much higher levels once we cross that Rs 480-490 hurdle.
Q: There has been a lot of talk about the IT index and the Bank ex but the space that has gone quite is oil and gas. On either Reliance or ONGC any clear patterns that you see?
A: No nothing. ONGC is flat, it goes up then comes down to Rs 260 and then goes to Rs 290-295. Its doing nothing and even that is not a trade that you buy at Rs 260 because sometimes it spends many days in that range.
Reliance will be a buying opportunity but not today. Either the Nifty rallies tomorrow or Reliance completes its correction by another day of decline then Reliance is a buy. Oil and gas in any case is not one of the favoured sectors of whatever the current rally will give. That should be IT.
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