Sukhani's strategy now: Short positions with small volumes

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Sukhani's strategy now: Short positions with small volumes

Sudarshan Sukhani of s2analystics spoke to CNBC-TV18 about where the market is likely to go today and what are the best ways to play the rally.

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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 Infosys See messages about Infosys

Sudarshan Sukhani of s2analystics spoke to CNBC-TV18 about where the market is likely to go today and what are the best ways to play the rally.

Below is the edited transcript of the interview. Also watch the accompanying videos.

Q: How are you feeling about the Nifty from here on?

A: I am feeling a little awkward now maintaining long positions. I already lifted a lot of them yesterday. I will get out of the long positions today and expect significant resistance in the 4950-5000 area. Yesterday's US market action tells us that Indian markets may be facing lot of resistance now. At some point now, I will also consider taking aggressive short positions, which means short positions with small volumes.

Q: You are selling Infosys ?

A: Yes, I think the Infosys rally was just on the back of a massive Nifty rally. The stock is weak and is looking to move towards Rs 2500. So the stop losses are visible for all traders. The targets are obviously a little more deep on the downside because you need to maintain these positions for relatively longer period of time and you should get Rs 2500 or even lower. It is the weakest of the top quality stocks.

Q: The banks have been doing most of the heavy lifting though and on something like Bank of Baroda there is still a buy potential?

A: There is buy potential because if the Nifty chops around and say, moves up 20-30 points and comes down, some stocks will go up. Bank of Baroda as well as the entire banking space suggests that in that chopping around, they could be the winners. So Bank of Baroda is a buying opportunity. Ideally, you want to buy it on any intraday dip but otherwise also there is more steam left in this entire sector.

Q: You have chosen Idea from telecom for the buy side today?

A: Yes, one reason is that the buyers are still mildly towards buying. We haven't actually gone down; it's just an anticipation that now we are going to face heavy weather. Idea has been in a correction, it's now willing to be lifted on the upside. Bharti and Idea, both are now buy candidates. Bharti was in my list couple of days ago and Idea is following Bharti; deep correction, consolidation and a rally; so there is more upside in Idea.

Q: What you think Biocon could be headed lower from here in the midcap space?

A: Yes, it could. My targets are Rs 245-246, but that's not necessarily the end of this decline. Once the market decides that this is the rally and this is the end of the rally, a lot of stocks will be headed lower. We are just starting with a small modest list now. Biocon has been one of the underperformers. A relief rally is probably over for this stock and it's a short sell; it's a relatively comfortable short sell.

Q: Is strength building on two wheeler loans again? You're buying Bajaj Auto ?

A: No strength is not building. I am buying it because all stocks rally, all stocks go through correction. Even if the stock now remains in a large trading range, this is a point from where Bajaj Auto can rally enough to give day trading or a swing trading trade on the long side. This is the limit, that's why I explained that this is not something you say now I can build a position in Bajaj Auto, that's not the case. But a swing on the upside is quite possible and likely, and some stocks will certainly go up. In a choppy market, Bajaj Auto is likely to be one of them.

Q: Gujarat Mineral also on your buy category?

A: GMDC is a better stock. When I say that, I really meant better than Bajaj Auto for a short-term trader and also for a position. The stock hasn't seen a deep correction. It just went up, consolidated and is now going up again. So for whatever reasons, it's outperforming its metal counter parts and mining counterparts too. GMDC is a buying opportunity. It's also something that investors should now start looking at.