Sukhani says buy LIC Housing, Educomp, Orchid; sell GMDC

Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by Sudarshan Sukhani See what other Experts & Brokerages are saying about LIC Housing Fin See messages about LIC Housing Fin LIC Housing Fin BSE | NSE 24/05/12 Are Mutual Funds betting on LIC Housing Fin? Other Stocks in this news Educomp Solutions | Gujarat Mineral Development Corporation | Hexaware Technologies | Power Finance Corporation | Idea Cellular | Ashok Leyland | Mahindra and Mahindra | Sun TV Network | Zee Entertainment Enterprises | Tata Power Company | Shree Renuka Sugars |

In an interview to CNBC-TV18, Sudarshan Sukhani of s2analytics.com suggests that investors remain long on the Nifty and continue to add to their portfolio. He recommends that traders maintain a position and buy on dips.

On his buying list, Sukhani has LIC Housing Finance , Sun TV , M&M , Idea , PFC and Educomp while his sell list includes GMDC .

Below is an edited transcript of his interview. Watch the accompanying video for more.

Q: What is your trading call on the Nifty today?

A: We will be long. The idea is to continue long positions and also add to them. Last week and the week before that, I explained that the market is entering a territory where day trading is not going to be as profitable as maintaining positions because we get the advantage of overnight gaps in our favour. We are now in that kind of a market. Once a gap is created then the rest of the day is almost choppy so day trading opportunities in the Nifty are likely to be less. If you maintain a position and buy on dips - that's going to be a far better option.

Q: Let's talk about a few stocks which are in your buy list today - LIC Housing Finance first.

A: Keeps on going up, formed a base somewhere around Rs 180 to Rs 200 - that base has not been violated. The stock has made a fairly bullish pattern. That suggests a target of Rs 300 plus. That's happening not just to LIC Housing but to many others. Yesterday, the breakout suggested that the stock is now on its way towards Rs 300. It will inch its way up, sometimes up, sometimes consolidate. Today it should be a good day. We should see a lot of follow through today.

Q: Educomp has come back on your buy list?

A: Yes and that's very rare because Educomp was on my sell list when it was Rs 800. It does appear that at least as far as short-term momentum is concerned, I wouldn't advice anyone to buy it as an investment. But we are traders and as far as short-term momentum is concerned and the momentum in Educomp is now changing on the upside, sometimes these high beta stocks can give fairly decent rewards once they start moving up because they also move in multiples - they move up just as they move down. I would advice traders to keep watching this stock. It has the potential to go up towards Rs 270 or even Rs 300.

Q: The only sell on your list today is GMDC?

A: That's because I thought we should have a sort of balanced frame of mind. GMDC is more in a trading range. It is possible that it is suggesting that we could go through a correction. So we are trying to take advantage of a downside correction rather than anything else. But it's a stock that can be considered also as a hedge towards any long positions in stocks because it is not moving up in a hurry.

Q: Orchid looks like a good buy to you this morning?

A: Yes it does. Orchid was a stock that went up, came down fairly and then it staged a small rally. Now it appears that it has decided that it would like to go up rather than move further down. That's also in tune with what the market is doing. So, again a high beta stock at point of time, Orchid does suggest a level of eventually Rs 200 plus but a short-term target of Rs 183 is likely. There is going to be some news on the 2G scam, so it is not necessary that the news affects only 2G related stocks. Sometimes the market sentiment can change. So stocks should be kept on all short-term positions.

Q: Yesterday Sun TV went up but today you have picked Zee from that basket?

A: I have talked about Sun TV many times before that it is on the verge of a significant uptrend and that's what happened. In fact day before it started that move, yesterday it simply confirmed that big upmove. Now Zee is not in the same grade as Sun TV but as a short-term momentum buy, Zee Entertainment appears to be doing the right things and making the appropriate patterns. There is a difference - Sun TV is a far better play for the longer-term but Zee is a momentum play for the short-term for day trading or for a couple of days.

Q: Are you continuing to be bullish on M&M today as well?

A: I am pretty bullish on it. M&M is probably one of the better auto stocks. The advantage is that it is starting from a low base while the others have already rallied very handsomely. I would say that for the short-term trader, M&M is willing to breakout so we will get the best risk-reward ratio. For the position trader, here is a stock that is now available at a low base for 30-40% gain. M&M is now my best pick in the auto sector.

Q: What kind of instruments is it most prudent to trade the Nifty long with right now?

A: I am using deep 5000 calls which are now almost 250 points in the money. It is virtually futures with much lower risks and the reason is that we do understand that the market momentum is up but sharp U-turns can come about anytime. A call therefore protects us from those sharp U-turns.

Q: How would you trade something like Ashok Leyland this morning?

A: I would still be a buyer no matter what the results are. The charts are very good. They are suggesting that it built a base that lasted more than a year and it is now breaking out above that base. Whatever small blips can come in or small intraday or a couple of days movement, I would look to buy it on a dip.

Q: What about Idea ?

A: Idea is also a buy. The reason it's a buy is that this market is extremely strong on the upside. Most stocks have built basing patterns, have started rallies and there is no reason to go short in anything. Idea suggests that there is more upmove ahead. The only point is that it's not necessary to trade in either Ashok Leyland or Idea. Probably there would be better stocks. That's a general statement. But both are in an uptrend and have to be bought.

Q: Any thoughts on PFC after yesterdays up move?

A: PFC and its cousin REC are in an uptrend. They have gone through a very decent correction and that correction seems to be over. When the next leg of the upmove starts, financials should come back quite nicely in favour. So PFC is a buy. It is probably an appropriate buy for today which may not be the case with Ashok Leyland.

Q: We will probably see Hexaware starting strong today. How would you trade it from thereon?

A: You try to go long. There is a short term target of Rs 91-92 if it opens strong but if it opens with some gap between the opening price and the target price then it is worth buying it because it does appear that it will cross Rs 90.

Q: What about Tata Power ?

A: It is also a buy and probably one of the better buying opportunities for the day. Tata Power has a very decent target also, Rs 116, or maybe a little more than that. The stops are tight enough to justify a day trade here. Tata Power seems to be one of the better power stocks also.

Q: Gold has closed that monthly high for January. What kind of targets are you seeing on gold?

A: It is now again going to challenge Rs 29,000. Currently it is trading at Rs 28,000 odd and some change. So there is Rs 1,000 target in gold that seems to be within reach. Then it starts getting those nervous breakdowns because then beyond Rs 29,000 it goes into lifetime highs. So this Rs 1,000 seems to be very easy. Remember, gold is a very highly leveraged instrument. You actually pay 3-4% margin and take the trade. So for a margin trader, Rs 1,000 is almost like a 100% return.

Q: A quick chart call on Shree Renuka ?

A: Renuka is good. Sugar stocks are moving up. They went through a very brief correction couple of days ago. It's not only that the chart is good, the sugar stocks are good. They have built very decent bases and are coming out of that. So it's a target of Rs 43 for Renuka.