Positive on Glenmark, GAIL, short IndusInd Bank: Sukhani

Sudarshan Sukhani of s2analytics.com says he unsure about the week ahead and will get a clearer picture as the week progresses. Despite a lot of movement, the Nifty is stalling and the momentum has come down and hence the net gains are missing. He feels the Nifty is at a make or break level of 6050 and it can either cross the level or fail to do so. “If the Nifty crosses the 6050 level, then there might be a 150-200 point rally, if not then the downtrend that had originally started will resume again,” says Sukhani.

He feels the Bank Nifty will continue to fall for some more time. He suggests shorting (short selling)IndusInd Bank in the next week. He is positive on the pharma sector and has a ‘buy’ call on Glenmark Pharma. “The stock has been rallying and is in a bull market of its own. So, bull market stocks continue to move up,” says Sukhani. He also advises buying GAIL. He sees the stock consolidating at lower levels and making a bullish pattern. He is quick to caution investors that the opportunities in both Glenmark and GAIL, are short-term in nature. Jain Irrigation too figures on Sukhani's buy list. He also has a speculative buy on Manappuram. He warns against trading in midcap stocks in the week ahead. He has a sell call on Financial Technology.  Also Read: Deutsche Bank cuts India GDP forecast to 5 percent Below is the verbatim transcript of Sudarshan Sukhani’s interview on CNBC-TV18 Q: Last week we emerged with just a little less than 0.5 percent gain so after all that chopping around the market did not really gain too much ground. What is the sense that you are getting for the next week?
A: The sense I am getting is that the Nifty is now stalling, momentum has come down and as you said that is exactly what the market is doing. We are seeing a lot of movement but net gains are missing. So, we are where we were. The joker in the pack is the Bank Nifty which is underperforming and falling and giving bearish signs. Therefore, the Nifty is at a make or break level at 6050, approximately in that area. Either it will cross it in which case we can expect a 150 or even a 200 point rally in the index or it will fail to cross it in which case I expect the downtrend that had originally started to resume again. This would be a corrective up move that would be over and then we will start heading towards 5500. So, by next weekend we will probably know so next week should be interesting and important both. Q: For the shorter term you do believe that the banks might be headed lower so I wanted your thoughts on the private sector banking space. Just for the shorter term or for next week specifically are there any short calls that you would advice in the private sector banking space?
A: It is not just next week I suspect this decline will continue for some time. However, for next week IndusInd Bank is a short selling idea. This stock is now making an intermediate distribution pattern which suggests that lower levels are coming. They may or may not but at least for the next week I imagine the downside momentum that it has picked up should see it through at lower levels. It is probably a very interesting short selling candidate. Q: You have a couple of buy calls, one in the pharmaceutical space and one in the oil and gas space next week. Take us through the rationale behind that and the target prices there?
A: We have Glenmark Pharma as the buy in pharmaceutical. Pharmaceuticals as a sector has been buoyant and cheerful. It has been outperforming, Glenmark itself is an outperformer. The stock has been rallying and is in a bull market of its own. So, bull market stocks continue to move up. We would really want to time the entry, this is a good time to buy. For the last four, five days the share is in a consolidation. Normally up trending stocks will breakout after the consolidation, that is what should happen next week. So, we are buying almost at the point of a breakout. So, Glenmark is a short-term swing trade on the long side for this reason.
The second is Gas Authority of India Limited (GAIL). GAIL has seen bad times, it now appears as this stock is consolidating at lower levels, is making a bullish pattern and is willing to go higher. It is already seen gains this week, the week that went by and the chances are these gains will be built upon in the next week because once momentum starts on the upside it doesn’t vain quickly, it continues till it distributes. So, GAIL is far away from distribution so far. It is a buying opportunity again.
Both these opportunities are short-term in nature, but they are worthwhile. Q: Last week we saw a lot of beaten down names gather traction in the midcap space. Manappuram was up 26 percent, Opto Circuits was up about 24 percent or so and a whole host of other names, Jain Irrigation was up about 15-20 percent. Do you think that is just a dead cat bounce or do you think there could be some trading fervor in these names and perhaps an opportunity to go long?
A: Some of them have opportunities to go long. For example Jain Irrigation has and even Manappuram has a speculative buy. However, the selling was overdone. Some of them don’t have it, the other names that you mentioned. So, traders should be aware that you have to differentiate. Next week, because of its likely choppy nature, it is not suited for trading in midcaps perhaps the week after would be better suited. Q: You do have a sell call on Financial Technology so does that look like a more – do you have a high conviction sell on that name and what would the target be there?
A: It is a high conviction sell because it is away from the stocks we just mentioned. Financial Technology has been in a bear market of its own, it has been falling. We have had a sell on it many times earlier, that decline continues. At Rs 600 it is now breaking all kinds of support levels so I would expect it to go much further down. It is a waterfall decline really. For short sellers it is a very good stock to go and sell. The upside is protected in the sense it is not likely to go up and if the markets tank a little also, if the Nifty weakens just a little bit this one could weaken much more.