Short sell if Nifty slips below 5500: Sudarshan Sukhani

Technical analyst, Sudarshan Sukhani, s2analytics.com suggests to short sell if Nifty falls below 5500 and stays there for some time. One should buy Puts because the Nifty can head lower than one's imagination, he cautioned.

Also Read: Boston blasts hit US market; how will Nifty react today? Below is the verbatim transcript of Sukhani's interview with CNBC-TV18. Q: How would you trade the market given the kind of close we had yesterday? A: Yesterday's close was irrelevant because the market had gone into a trading range and in the morning also the range was identified. The Nifty is in a range between 5,500 and 5,600. That is something that Nifty does periodically. Every two-three months it goes into a narrow boundary and there is no trade inside the trading area. There are intraday trades that only short-term traders can take. However, today I cannot see an intraday trade. It can develop as the day goes by. So, the Nifty is a no trade instrument as of now, there is no sense in going there. If Nifty cracks 5,500 and stays below it for some time that is a short sell, buy Puts, do not think how low it can go. It can go much lower than we imagine. On the other hand with all the good news that is coming to India, more than 5,600 is a buy. The Bank Nifty is a buying opportunity. A dip today should be bought into and keep a stop loss because market can do anything, but the instrument still deserves a buy.  Market may not dip below 5500: Raamdeo Agrawal Q: If the market does test 5,500 levels, what kind of short stance do you take in the sense how open do you leave positions on the downside? A: If the market breaks 5,500 initial short position should be taken and if it closes below 5,500 towards the end of the day then the positions should be continued and carried then we are assuming that this market is willing to go lower. That is how a trading range breaks. There maybe a whipsaw. However, as of now short positions on a carryover basis should be justified. Q: You have a buy call on Canara Bank this morning? A: Yes, trading should be done in context. If the market opens wherever they will and the banks remains steady then one should consider buying because then the banks are testing their lows and probably willing to go higher. Canara Bank made some kind of a double bottom, it has done well yesterday; most banks did that and even if it dips a bit buying should be done. The context is, suppose the Nifty opens 30 points lower and immediately starts sliding and goes 30-40 points lower more then there is no buying left. Disclosure: Sudarshan Sukhani has no holdings in the stocks discussed. _PAGEBREAK_ Q: You would sell Titan Industries today? A: Yes. Titan in any case was in a bear market so the rallies in Titan have been sold into earlier also. Yesterday it broke down and almost all Tata group stocks. Titan has broken down from a trading range, promising new lows. This stock will go much lower before it ends its bear market. Every rally here is a selling opportunity. Q: You are cautious on some of the metal names and Hindustan Zinc is a short today? A: That is a difficult short in the sense the stock was in a trading range and there was a promise that it could break it on the upside, but that did not happen. Yesterday it broke on the downside. It has joined the party with most other metal stocks, which were in any case bearish. Therefore, a big decline in Hindustan Zinc, a range breakdown suggests that the range was a continuation and lower levels are coming. This is a message that all metals are giving us. So, sell Hindustan Zinc. The chances are that the short-term trader even a day trader would make money and if one want, carry some positions forward. Q: You are buying Adani Enterprises? A: It is a much better chart. It has already one into a bear market, Rs 300 to Rs 200 and at Rs 200 it bounced back, had a minor V-shaped rally then that rally went into a consolidation. That consolidation now seems to be breaking on the upside. It is one of the better stocks to buy into. The market will eventually decide whether all of these stocks, the buying will make money or the selling will make money, but these are the setup and one should be aware that one side is going to make money anyway. Q: Private banking names are once again showing support this morning. Would you trade anything there? A: We have been upbeat on private banks and public sector undertaking (PSUs) for short-term trading. They have come in the buy list so the key is to wait for the market to open, do not rush into it. If one can sense a feeling of stability after the first half an hour then the Bank Nifty and the banking stocks are the  buying opportunities, focus on the four private sector and public sector banks, State Bank of India, Axis Bank, ICICI Bank and HDFC Bank. Q: You were talking about 5,600 being a confirmation of the fact that the market wouldn’t breakdown too much. Assuming we do not get there but the market manages to trade flat or with some green today. Would that also be a signal that we are not breaking down in a hurry? A: We are already getting that signal that 5,500 is not giving way, every time we go there we see a bounce so we know that 5,500 is not breaking in a hurry, but 100 point trading range is treacherous and we have seen how the market has spend days sometimes weeks inside 100 point range and traders get killed and chopped. Therefore, I would not take a long position until and unless the Nifty suggests going above 5,600. That is the time when position should be taken on the long side and built upon as it goes further up. It is not very far. _PAGEBREAK_ Q: You would continue to trade long on Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL)? A: Yes, I would and Indian Oil Corporation (IOC) although HPCL and BPCL are favourites. All three companies have bottomed out; they have gone through sharp corrections. The charts independently suggest that minor base building process has been completed and they should be taken on the long side.  Q: Technically how does the chart look of Tata Power? A: It is a complete avoid. It is not a sell; it is not a buy so it is easier to say not to look at it. A lot of fundamental news keeps on coming. I would not bet on that stock. Q: What would the markers be on gold right now or are there any? A: No, there are no markers. First, in the international market USD 1,450 per ounce has given way almost like a knife through butter sliced away without any bother and that is not good news for gold owners and bulls. I have been one of them. Second, in the Indian market the same rupee levels have already given way, Rs 29,500 per 10gm significant, Rs 26,000 per 10 gm important. So, there is nothing. On the international market, on COMEX, I would expect gold to come to USD 1,100 per ounce. That is 20 percent away from where it is now. Therefore, we are looking at more Rs 5,000 getting shaved off on gold prices in India bringing it down to Rs 20,000-21,000 per 10gm. It is not a very cheerful scenario for the buyers.    Q: Usually the most actively traded one is silver and that is why there is greater volatility as well, a similar kind of outlook for that? A: I have been bearish on silver for a long time for the simple reason that it went to Rs 75,000 per kilogram and collapsed from there. That is the beginning of a bear market. So, on silver the fact that it will come to Rs 30,000 per kilogram was even visible then when it begun its slide. Gold has been has been a surprise to me. I thought both of them will diverge, gold will go through a mild correction while silver will continue coming down. Silver’s decline is just midway, much lower levels are coming. When there are excesses on the upside, they have to be tempered by similar declines.