Sell on all rallies; 200-DMA just a number now: Sukhani

Technical analyst Sudarshan Sukhani of s2analytics.com said the market could go choppy rather than immediately breaking 5,600. He feels the market could create a lot of chaos, have intraday rallies and declines and go all over the place without giving a direction.

"If we are not crossing the highs that we made, that is 5,750 then sooner or later 5,600 will break and the next decline is towards 5,500-5,400, wherever the market stops," he said in an interview to CNBC-TV18. Don't short Nifty at 5700; bet on pharma, power: Experts
 
Below is the verbatim transcript of Sukhani's interview with CNBC-TV18. Q: How are you approaching trade this morning if we get a bit of a gap down? A: The index has resumed its downtrend; we had a short upmove, four-five days, people could make money out of it. A 90 point intraday decline, in fact it was almost 100 points, is not the sign of an upmove. It is suggesting that the correction on the upside is over and the market is resuming its downtrend. So, now the short-term trend as well as the intermediate trend are in sync; both are synchronized, both are pointing down. Earlier we were going up while the main trend was down and now the short-term move has joined the party on the downside. What could happen? That is the view that one needs to take as he enter the trade today. Market could go choppy rather than immediately breaking 5,600; market could create a lot of chaos, have intraday rallies and declines and go all over the place without giving a direction. However, the direction would still be that if we are not crossing the highs that we made, that is 5,750 then sooner or later 5,600 will break and the next decline is towards 5,500-5,400, wherever the market stops. Therefore, one should be selling on rallies rather than buying and wait patiently for this market to give 200 point decline. Q: The 200 day moving average is also around 5,630. Do you think that is a level, which the market might respect or is it of any significance while you are tracking technical? A: It is of significant only for first time. The first time the market went to the 200 day moving average (DMA) that was in the middle of March and it bounced back quite dramatically. So, that suggested that support is coming in but the second time it went again about 10-12 days ago and the third time it is now going today. Therefore, every time the market goes to the 200 day moving average then that is no longer support, it becomes a random number. Only the first occurrence of this support should be taken with some kind of strength but that is happening again and again so I would just say that this repeated bounce back is not going to work out. The market is suggesting that the 200 day average is just a number now. I would simply ignore it; these repeated tests are no longer relevant. Repeated test means that the market is weak. The first time it tested it should have gone up and stayed up. It is not doing that. However, it is not relevant anymore. Q: National Mineral Development Corporation (NMDC) had a scary fall yesterday. Is it seeking out levels, which we did not think about earlier? A: Yes, it is scary because the charts have become like a horror movie now, many of the public sector undertaking (PSU) charts and even private charts. NMDC is giving a sense that it is entering a freefall. I do not know why it is doing that, it is not for me to judge. However, the idea that Rs 150 will hold, that went away. Now there are no support levels and it is going towards a double digit number. I cannot imagine why it would do that. Disclosure: Sudarshan Sukhani has no holdings in the stocks discussed. _PAGEBREAK_ Q: What about Rural Electrification Corporation (REC), also a short call today? A: REC's three-four day rally together with the Nifty stopped exactly at a resistance level. Yesterday we saw a decline again. The rallies were so small, they were almost negligible. So, the downtrend is very much intact, it is probably moving lower. There is a theme here, PSUs, we need some more analysis and some people hopefully will provide that. However, the theme is that PSUs are going down much more; REC is now on the verge of breaking all kind of support levels. The trade is to go short in it and rather than shorting it in the morning, wait for intraday rallies. One will always get better trade location if one does that. Q: There is still safety in IT names like Hexaware Technologies? A: There is. Hexaware has found support at Rs 84. It bounced back although it is not very strong support, for the same reason that it comes there and goes back every time it tests Rs 84. However, for whatever its worth, Hexaware is a buying opportunity and we have our exit strategies in place; we have a stop loss in case IT does begin to disappoint and it may not because the dollar seems to be quite bullish. If IT still does disappoint then exit otherwise this midcap IT and even largecap could go its own way while the market goes another way.   Q: You are negative on Coal India this morning? A: Yes. I thought maybe Rs 295 is holding and perhaps the rally is starting. However, that was coincident with the Nifty. The Nifty collapsed yesterday and Coal India did it almost immediately. Rs 310 has proved to be strong resistance, it is now on the verge of making new lows for itself, it is very disappointing and the underlying theme of PSUs still comes into play but it is a short sell. I think position trader could buy Puts and wait patiently through the month of April, for all the three PSUs that we have discussed, REC, NMDC and Coal India. Q: Indiabulls Financial Services is in your buy list today? A: Indiabulls is very interesting because the charts are attractive. Indiabulls has been falling but it came at a level from where it made a trading range and actually yesterday in spite of the big decline in the Nifty the stock has broken on the upside. So, there is something that is going on here, which one might like to buy into. Wait for a dip and one will probably get that dip today. It is worth buying into because this breakout could mean something very different. Q: How would you trade Aurobindo Pharma? A: Aurobindo Pharma is not one of my preferred long buying opportunities but it is an opportunity. The reason it is not preferred is that there was a V-shaped recovery. It was falling relentlessly and suddenly it started going up. It is up for the last three-four days. However, a V-shaped recovery becomes very doubtful. Therefore, the fact remains that it is moving up, it has broken a minor resistance level. So, if there is dip, Aurobindo is a buying opportunity, if it is not working out then get out immediately. _PAGEBREAK_ Q: Your view on Tata Motors and how you would trade it? A: I would sell it. Tata Motors was in a downtrend, a pattern target of Rs 230 is available and it should reach there. Q: What about Reliance Communications? A: After so much noise in media, Reliance Communications (RComm) should be bought into. However, be careful. It is not a sell but the buying should be done with a stop loss if it is not working out do not live on hope. Q: What did you make of Bharti Airtel’s crack yesterday? A: Bharti Airtel has confirmed a very bearish pattern. A bearish pattern at Rs 290, it is not as if it was at Rs 400. Therefore, it is a pity. However, it is going down. The trade in Bharti is to sell it. Q: What about Reliance Industries from the largecap bunch? A: Reliance needs to be sold and short. It is now confirming another bearish patter. I am also amazed because Bharti and Reliance were my favourites for going long into and both the stocks have completely disappointed and these are the largest caps and the best. Reliance is a short sell. Q: Has Titan Industries ended its pullback? A: Yes, it has ended its pullback and it is going to be a lot of fun at least there are some stocks where the prediction of going down is working out nicely. Titan will go down, break Rs 200, traders should be short in it and buy Puts.