Market choppy; focus on individual stocks: Sukhani

In an interview to CNBC-TV18 technical analyst, Sudarshan Sukhani, s2analytics.com shared his reading and outlook on the market and specific stocks.

Below is the verbatim transcript of Sukhani's interview with CNBC-TV18. Q: Indications that we may have a soft start today, how would you approach it as a Nifty trader? A: The week is now starting well. Last week the suggestion was to go long keeping stop loss at 5,500 and then the market went into a trading range. For those who have long positions, the stop is at 5,500 Nifty. I am saying this before the Nifty diagnosis because one has to manage trades. If the Nifty open below 5,500, goes there anytime then the trade is off. So, essentially the market is in a choppy trading range. There is no sense that if we are going up there is certainly a difficult trade on the short side. Our intermediate short positions are maintained but for very short-term trader. A trading range is not a good location to trade in; even below 5,500 there is no clear pattern that we should be selling into that breakdown. It is much better to step aside, focus on individual stocks. Banks, FMCG results may negatively surprise: Nirmal Jain The Bank Nifty is doing something very different. It has made a double bottom and it is giving signs of breaking out and confirming the down bottom. If that happens then the Bank Nifty is in an easier buying opportunity rather than selling the Nifty. Just focus on Bank Nifty for the time being. Q: You still have conviction to sell Sterlite Industries? A: Yes absolutely. Sterlite has been trading in a narrow range for the last four-five days and that is not all, it is making new lows inside that narrow range. However, metal is a very weak sector and Sterlite has been weak, it is underperforming the Nifty, which is suggesting a lot. It is difficult to underperform the Nifty in the last few days. Therefore, Sterlite is a short sell. For all I know that Nifty could crack 5,500 and continue going down. One will have to then take some short-term positions there but one can easily start with weaker stocks. Infosys facing downgrades; underweight on FMCG, IT: BofA ML Q: Jaiprakash Associates had good bouts on Friday. You think it could be good for more? A: It is a buying opportunity; it has made a double bottom of some sorts and on Friday it confirmed that and Friday was a bad day for the market otherwise, at least in terms of the Nifty. So, there is a sense that something is going on there, the smart money is buying; it is giving us tradable patterns. So, JP Associates is a buying opportunity. Ideally we want to buy it on a dip and hopefully we will get that dip. If the market decides to move down maybe this trade won’t work out so keep a stop, but it could easily work out if the market is choppy. Disclosure: Sudarshan Sukhani has no holdings in the stocks discussed. _PAGEBREAK_ Q: You are buying GAIL India. A: GAIL India has been for a long only trade. It has been floundering, doing nothing, but that is how a base begins to build, that is how a good stock then eventually starts a rally. Therefore, there are lot of signs that GAIL is now finding strong support at Rs 300 and it just needs a little bit of smart money to push it higher. We are buying in anticipation but chart suggests that there is no harm in buying this low risk and possibly high reward trade. Q: You are buying Hindustan Petroleum Corporation (HPCL) from oil and gas pocket? A: HPCL has a far better chart than most of these stocks we are discussing. We have a context that crude is coming down, whatever that context is and both Bharat Petroleum Corporation (BPCL) and HPCL are giving signs that there is a base building and that exercise is over and a breakout has taken place. So, both stocks are giving same signals. We chose HPCL, it is now alternating. It is not only a day trade; it is also a position trading opportunity. Q: You are long on Tata Global Beverage. A: Yes. Tata Global has fallen from Rs 190 to 120. Now it has stopped. Some stocks are going to go up in a choppy market. That is why the list is biased in favour of long only positions. It is very difficult to sell the Nifty at 5,500 and say we are going to 5,200 without any pause. We could, but the Bank Nifty is saying otherwise. Therefore, I just stepped aside. If the market is going up then a lot of the good quality stocks that have been beaten down are going to see some tradable rallies. Tata Global is one of them, made a base, a double bottom, confirmed it, it is moving up. Let's hope it works out. Q: You have a sell call on Maruti Suzuki? A: Maruti had a V-shaped rally that rally then fell into lot of resistance at Rs 1,450 levels. That resistance is holding. It is my sense that the V-shaped rally was not a genuine buy, it was more operator driven, but one big large range day and then the stock gave up its strength. Mahindra and Mahindra (M&M) is a short selling candidate. It is not in the list today. The autos are not doing good things on the charts so Maruti is a short sell; keep a tight stop, chances are that at least a day trade on the short side is available. Q: How would you approach trade with this kind of indication in terms of opening? A: If one has long trades then they should be closed immediately. There is no opportunity to buy and this is not a dip. The problem comes for short-term traders on how to go short in this market as it breaks 5,500 barriers. My suggestion would be that intraday opportunities to go short should be looked into only as the day progresses. There is no immediate shorting trigger available even though market may be going down. One has to wait for some consolidation that allows us to sell. The view is that this market is either choppy or probably beginning a new downtrend. The choppy view is likely to prevail. That is what I would think but the bullishness seems to be over until and unless we do not cross 5,600. _PAGEBREAK_ Q: What is going wrong with Dish TV's chart? A: Dish TV is now in a downtrend so the rally one saw was a bear market rally, a relief rally. It faced strong resistance and it is likely to come down from that resistance levels. It is a short selling ideas and the short selling is done in some kind of strength at a better price. Q: How about Mahindra Satyam, would that be a long from the IT space for you? A: I would consider that because at Rs 118-120 that stock has lot of support so that support holds or it is also going to go with other IT stocks and the broad IT outlook becomes weak. That is a different issue. However, at this point one should be a buyer into it. There is no rush into buying it as the market opens weak, but the trade should be to be on the long side. Q: Would you continue to buy into Ambuja Cements? A: No, I would not, I would assume that Ambuja was one-off move; the stock has to do much more to tell us that a sustained buying is possible. At this point it is to avoid or a short sell, but not a buy.   Q: Coal India is not able to recover very successfully. A: No, it is not. At Rs 310 it encounter a lot of resistance, which means that the rally was almost nothing, it was 15 points. It is a short selling idea and the trade is that perhaps the Rs 295 levels will break on the downside and a steeper correction will start. Q: How would you trade Canara Bank? A: It is a short sell. Public sector undertaking (PSU) banks have been beaten about. After Friday's rally there is a question mark about will the banks continue their rally today. We do not know otherwise it is a one-off event. For Canara Bank we are assuming it was a one-off event and the normal downtrend will resume. Therefore, go short or avoid it but do not try to buy. Q: How would you trade gold and locally what kind of downside do you see in domestic prices? A: It has been a disaster. Gold has now broken all kind of support levels. We were bearish on silver, but I was assuming gold is a correction. However, the breaking of Rs 29,000 per 10gm levels on gold suggests that this is not a correction; it is a serious down move that is coming. The targets for this decline are somewhere around Rs 24,000-25,000 per 10gm. That is a lot of decline that is possible. Therefore, gold is to be traded now on the short side, wait for small pullback rallies. One may not even get large pullback rallies here. Wait for a rally and sell into that strength, but expect a level at least Rs 3,000 below at Rs 25,000.