Nifty may slip below 5500; take profit on shorts: Sukhani

Technical analyst, Sudarshan Sukhani, s2analytics.com shared his reading and outlook on the market and various stocks.

Below is the verbatim transcript of Sukhani's interview with CNBC-TV18. Sensex may sink to 16K as bears step up game: First Global Q: Disappointing run all of last week, what kind of bias would you approach trade with this morning? A: It is disappointing for the bulls certainly, but the market trend has been down for the last two months. So, the trend is down and the market goes down. I do not think we can fault the market to do that. The intermediate trend is down and people are thinking that lows of the year are being made now, but I doubt it. I think this market will go down in 2013, much lower than 5,500. Therefore, the view on the intermediate term is very clear; we are going lower and there are visible chart patterns that suggest that. The difficulty for short-term traders is the immediate view. That can become chaotic or even choppy sometimes and there, there is a problem. We have fallen a lot, at this point 5,500 is a strong support so the market can fall below support and it does not have to stay here. My problem is, can I go short now at a point where the market is standing at such strong support and it has already fallen and the answer is it is very difficult to go short. So, for short-term traders the strategy would be to take profits on short positions, any short positions created on Friday or Thursday and step aside. If this market falls then it will have to fall without me. That is with some regret because we all want to catch these moves but the best trade is to step aside today. Q: You think Sintex Industries has more downside? A: It fell a lot and it had a three day rally coinciding with the Nifty and then started falling again. That three-four day rally looks like a bear flag and that suggest that another Rs 10 in Sintex maybe taken off by the time this bear market ends in the stock, it is not necessarily going to happen now. However, the trade is on the short side. We had a narrow range day on Friday for Sintex and that suggest that it is going to make a breakout. It will not be on the upside, it will be a breakdown on the downside. Go short in it; keep a stop loss in case the market suddenly turns around. That is a different issue, but otherwise it is going much lower. Q: You like Adani Enterprises for the day? A: Yes, we like it because of two reason; first it seems to have completed a bear market. That is the first sense we are getting. It has been rallying for the last five days and the Nifty decline saw Adani stop the rally but did not fall. There seems to be some sense that after a big sharp decline this stock is building some kind of a base maybe at least for a short-term. Therefore, among all the buying opportunities, Adani is one of the better ones. Disclosure: Sudarshan Sukhani has no holdings in the stocks discussed. _PAGEBREAK_ Q: You are selling Allahabad Bank today? A: Allahabad Bank is a short sell. It has same pattern of Sintex and that is a pity because public sector undertaking (PSU) banks are going much lower. It had a four-five day rally. That rally finished and together with Nifty, it has been falling. It is on the verge of making new lows for this downtrend. Public sector undertaking banks have to be sold into. We cannot become bargain hungers, not till the pattern change. I suspect it is not just Allahabad Bank but a whole range of PSU banks as well as private sector banks, which qualify for selling. We picked Allahabad Bank because it is on the verge of making a new breakdown. Q: You are buying Oil and Natural Gas Corporation (ONGC), which held it? A: It held out, it also got strong support at Rs 300; it bounced from that support many times. This is not very significant support because repeated bounces weakened that support level, but it is there at least it is not broken out. On Friday it showed signs of life. Therefore, Rs 300 could hold and ONGC could lead and so many things can happen in the market. There is a buying opportunity here. We want to take that opportunity. Ideally we want to take the opportunity once the context is clear. If the market opens lower and continues drifting, there is no need to buy anything. However, if the intraday movement starts giving signs of life on the upside then ONGC is certainly qualifying as a buying opportunity. Q: You have also picked Hindustan Unilever (HUL) from the blue chip space? A: Hindustan Unilever is amazing. The stock has made two month base and is now breaking out and no matter what the Nifty does, HUL is moving up. So, here is a day trade, a swing trade and a position trade, just buy Futures, buy equity, trade on the long side even on intraday basis, any dip here is a buying opportunity. Therefore, if the Nifty falls and HUL dips then go long in it. Q: You have a sell call on Ambuja Cements? A: These stocks are making new lows all the time. I do not know what the reasons are. They are not stopping. There was a new low; the new lows normally continue. We see a lot of follow-through. I think Ambuja and all the other cement pack companies will have a follow-through on the downside. Therefore, after first 15 minutes if the stock starts cracking, do not wait for a context here. Short it.  Q: How do you approach a flat market? A: 5,550 is better than what the SGX was suggesting. My view would be to take opening price and wait for 15 minutes. This market could chop around. It could go down and up and do both the things today. Therefore, anything below the opening price, the first 15 minutes low. If the low is broken we want to be buyer at that point, which means any dip is a buying opportunity. If the price goes 20-25 points above the open, we want to be sellers. Assume that the market will be range bound in a 50 point range. So, try to get these buying and selling opportunities on dips and rallies. Sell on a rally, buy on a dip. _PAGEBREAK_ Q: If we do get an attempted pullback, what could be the Nifty levels that we could reach in a pullback where you think it will top out and where you would be exploring short options again? A: Anywhere around 5,650 would be a place where we start exploring short options, reinstating short positions or even adding to the positional trades. The Nifty had cracked at 5,680. That is when the sell signal was given, three trading days ago. Therefore, if it reaches that level again close by that would be an ideal opportunity to reinstate shorts. That is something we have to judge when the market reach there. Q: ITC's price action has been a bit disappointing, where do you see it heading? A: It is heading lower, immediately in a very short-term it could be Rs 280-284 so there is a short trade here. However, ITC needs to be sold only in context. If the Nifty is going up then do not sell it otherwise 2 percent downside is easy. The charts do not suggest that ITC is a in a sustained downtrend. It is just chopping around. Q: How would you trade IDFC? A: IDFC is a short sell and that is mainly because most stocks are falling but as a matter of trading practice I would not sell it. The stock is relatively stronger to other financials so avoid it for the time being. Q: Your views on GMR Infrastructure? A: GMR is a buy. It is astonishing what it has done. It is going up from Rs 19-20 levels and the small corrections are buying opportunities in GMR. The chart suggests there is an optimistic story building up here so in any case one should be a buyer. Q: Do you think NMDC might be exhausting itself from the way down, is it oversold or do you see more downside in this? A: There is more downside, apart from any small rally that can come up because of the Nifty because of market conditions, just a relief rally, it is possible that NMDC eventually may reach double digits, very unfortunate but immediately a target of Rs 115-116 is possible on the downside. Therefore, there is a trade, one wants to sell it. If one can get a small rally and sell into it. That is much better. Q: What about Exide Industries. It seemed like it was stabilising around Rs 125-130 but it started cracking again? A: Yes, it started cracking again and that is the story of so many midcaps, in fact even Reliance Industries. So, these messages are very worrying. Exide is now looking towards Rs 100; it has broken all kinds of support levels and immediate target could be Rs 112-113 for the day trader, but eventually the slide is inevitable. Q: Your views on L&T Finance Holdings? A: That is a disappointment. I thought it will hold on, but it has not. However, at Rs 75 it is still a better stock. One cannot short sell otherwise I would have said to sell. The idea is to avoid it perhaps it will get much stronger support in the Rs 68-70 zone then one should reappraise the trade. At this point it is to avoid because one cannot sell it.