The trend is visibly down on Nifty: Sudarshan Sukhani

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

Q: First a word on the Nifty trading call….

A: Well yesterday we went short on the Nifty in the afternoon and that is the view on Nifty. There has been some kind of a mix. First, went long on Friday, cut that long position and went short because 5200 was being broken decisively. That’s decisive enough for me. Now the markets will struggle for some time and sometimes try to stage relief rallies, but to me as of now, the trend is clearly and visibly down.

Q: Infrastructure stocks have been struggling for the last few days. JP Associates is something that you would be comfortable shorting?

A: Yes, JP Associates has seen a very decent rally from Rs 54 to Rs 78, and now for the last 15 days, its being struggling to cross those levels, make new highs, it’s not done that. Yesterday it cracked and taken in conjunction with what the Nifty is doing, what other infrastructure stocks are doing, its reasonable to assume that intermediate top has been made in the stock. So JP Associates is likely to see a deep correction. So it’s a very nice shorting idea.

Q: Yesterday pharmaceutical stocks were the only sector which held out… all of them, Ranbaxy , Sun , Dr Reddy’s . Have picked one of them for the long side today?

A: Yes, that’s Dr Reddy’s. A long side trade is possible even if the markets were to continue drifting down. Dr Reddy’s actually rallied yesterday, but much more important, it’s in a narrow trading range for the last two weeks. It’s on the verge of a breakout.

Now, it’s not easy to say okay just because I have put it in my list it is going to break out in the morning but that breakout is eminent. So you need to watch it, traders need to trade on long side, and you can actually take a chance and say okay, if not today, it will move up tomorrow. Once it breaks out Rs 1600 uncharted territory. So Dr. Reddy’s at this point is a very suitable buying opportunity.

Q: You were selling United Phosphorus ?

A: For the last three months, a number of stocks were making these basing patterns. All of them reached resistance levels and the assumption was that they will breakout on the upside. Almost all of them are now falling from those resistance levels. United Phosphorus shows a similar pattern, it was in a trading range, it went to the resistance at Rs 155, the assumption could have been that it will break out, it did not. Its now cracking, Rs 155- 120 which is the lower end of the trading range, that’s a very reasonable expectation for not just United Phosphorus, for most of the stocks that they will now come and touch the lower ends. It’s a short selling idea and I think there is money even if it doesn’t touch Rs 120.

Q: You have a similar view on Bharat Forge today as well?

A: The resistance was at Rs 305-310, again it did not cross. It has cracked. Bharat Forge has actually fallen more than United Phosphorus, giving us very clear signs that the stop is at Rs 250; I mean the place where it is finding support will be around Rs 250. That’s not the target for intraday traders, but the theme is the same. All resistance levels which I expected would be taken out on the upside, have actually being proved to be resistance levels. Once you touch them, once you start coming down, then the only way the stock is going to stop is when it finds support. That’s Rs 250 for Bharat Forge.

Q: We have been talking a lot about the bank Nifty and the indications from that. What is it that you see on your charts?

A: The Bank Nifty has been an underperformer after all the news that has been coming in. It tries to stage these intraday rallies and fails miserably. The Bank Nifty was actually a sell even yesterday, it never came into a buy even on Friday. So we were short on the Bank Nifty in spite of small rallies in the Nifty on Friday. It tells us that significantly more downside is expected, 9000 should be cracked on the downside. We’ll just have to see where it lands up, but it’s not showing a good picture.