Short-term trend up; use dips to reenter market: Sukhani

Technical analyst, Sudarshan Sukhani, s2analytics.com said that traders who do not have position or who exited yesterday, a correction today would provide an opportunity to reenter.

Nifty to hover in 5600-6100; bet on IT, pharma: Amisha Vora Below is the verbatim transcript of Sukhani's interview with CNBC-TV18. Q: Today seems like one should take profits and move out given what the SGX is suggesting. However, what is your recommendation? A: Yesterday was the day when one should have taken profits because the market gave a good chance towards afternoon and for savvy traders short-term trades, take profits and come back again. Today if one has not done it then one do not want to exit at the lows of the day then one has to be patient, stop is still 5,630. Chances are that if we see a dip today rather than a beginning of a downtrend, these dips will keep on coming. For traders who do not have position or who exited yesterday, a correction today would provide an opportunity to reenter, which means the short-term trend is still up, in spite of the declines we can see today and that  trend should last for a couple of days at least. Earnings downgrades to continue in FY14: BofA-Merrill Q: Do you think Bharat Heavy Electricals (BHEL) could have a short-term pullback? A: Yes. First sign of life has come in BHEL. On a shorter term timeframe, on intraday chart we are seeing a bullish head and shoulder and it has broken out. Therefore, it is quite possible that this one has some momentum on the upside. As we anticipate the market opens lower; traders get to buy it at a lower price, which is better; the risk reward becomes that much more favourable. So, I would say go for BHEL, it is a short-term trade. We are only discussing short-term trades, not a sudden positional buy. Q: Where is Bajaj Auto headed? A: It is heading down; it is a pity, its one of the better stocks. However, that is the way the market behaves. Yesterday’s price action dotted to new lows for this downtrend and new lows are always bearish. So, I expect more downside here before this big decline ends then a base building starts. That is a long way off. Disclosure: Sudarshan Sukhani has no holdings in the stocks discussed. _PAGEBREAK_ Q: Do you think HCL Technologies is headed for fresh highs? A: It does appear so. For the last four days it has been consolidating at the top of its price range. It is almost there for new highs and Infosys then Tata Consultancy Services (TCS) have done well. I would assume that HCL Tech is now coming into play. A small narrow range yesterday suggests a breakout on the upside is imminent and this is becoming cyclical; buy Wipro then Infosys then TCS and now HCL Tech probably is coming in that form. So, technically otherwise as one of the four, is a good buying opportunity. Q: You are not convinced about the move in the midcaps and you have only one buy stock in your list and that is Gitanjali Gems. A: Yes. Midcaps need to do a lot of work on charts before we can say buy them. Gitanjali Gems has done it, it had a fantastic rally and then for the last three months it has been in a trading range. That range is breaking on the upside and that is the way it should be because when one enter a range after a rally the eventual breakout should be in the direction of the up move. So, it is going into life time new highs. Gitanjali Gems is a buying opportunity; not just a day trade, it is a swing trade, it is a position trade. Any timeframe one want to hold on to, it is worth buying into. Q: You have picked Cipla in pharmaceutical space? A: Yes. Cipla is in a trading range. I am assuming this range is going to breakout on the upside. It has not done so, but if it does then we are buying in anticipation and hopefully at a much lower price. Given the fact that Dr Reddy's Laboratories has done well given attractive chart, Sun Pharmaceutical Industries has done this, Lupin has done this and Cipla is on the verge of a breakout. It makes sense to anticipate that breakout and buy. Q: You have a sell on Grasim Industries. It's been six month journey downside, what is the call now? A: The call is that the journey continues. It does not stop. There is probably some other reason. However, for traders it is a selling opportunity, a relatively low risk selling opportunity. Therefore, keep a stop and expect it to go down. If one gets some good moves then even carry it forward.  Q: A bit of short covering was seen in Sterlite Industries yesterday post the Supreme Court news, how would you approach it today? A: Ideally I would not touch it but if somebody wants to trade then the trade is on the short side. A small rally yesterday, which did not even cross the last five-eight day highs, is irrelevant. The market needs follow-through. Therefore, if the stock is going up, do not do anything. If it stalls then sell it. Q: What did you make of yesterday's fall in Mahindra Satyam because that has been strong stock? A: It has been a strong stock. At this point we will assume that these random occurrences come in both the stocks, Mahindra Satyam as well as Tech Mahindra and one should be a buyer in them, not necessarily at the open but wait patiently for this stock decline to stop and then go long in it. Strong stocks do not suddenly turnaround and become weak. Therefore, one should be a buyer here. _PAGEBREAK_ Q: Your views on Oil and Natural Gas Corporation (ONGC)? A: ONGC is one of the far better stocks in the blue chip universe and in the entire set of stocks we have. The stock went down to Rs 290-295, had a deep correction, strong support there and we have seen a small dip again; this dip is a buying opportunity. However, ONGC is going to new highs. Q: What did you take away from Yes Bank’s upmove? A: For a trader who wants to trade in private sector bank, there is a buying opportunity here. I will not go overbold with it, which means I should not expect a big move here. The big moves will come in the bigger names like HDFC Bank, Axis Bank, ICICI Bank. The trade is to go long, if one wants to. Q: Would you trade Indraprastha Gas (IGL) on the long side today? A: Yes, I would. Indraprastha Gas has been in our buy list earlier, it has made wonderful pattern, strong base and broken out from it. Therefore, this breakout, these goods days to be traded into as buy because one should expect follow-through. IGL is a position trade. Q: How would you trade a blue chip like IDFC? A: IDFC is still a short sell. One-two days or rallies are not enough to justify changing stance. However, I would not sell it either, in fact I would avoid it. If there is a sharp rally then it is a sell into strength otherwise step aside. Q: What do you think is more likely in the April series, a revisit of 5,900 or a breakdown to 5,600 again? A: It is possible that we will see both the events; a revisit to 5,900 is possible; market momentum seems to be on the long side and then a final breakdown at least a move towards 5,600 by the time April ends. Therefore, I would assume that it is quite possible; April should be a very volatile month. Q: What price would you see on the stock of Reliance Communications? A: I would stay away from it. News driven stocks are not worth and specially Anil Dhirubhai Ambani Group (ADAG) stocks. It is better to focus on Bharti Airtel where a strong pattern is being made. Bharti is going to give an imminent breakout or breakdown. One way or the other, whichever way it moves, traders should follow it. There is a strong move coming.