Nifty deeply oversold; don't short sell: Sukhani

Technical analyst, Sudarshan Sukhani, s2analytics.com said that the Nifty is now deeply oversold and the intermediate trend is down.

He advises traders to go on the long side. "If there is a dip or a sudden intraday reversal, the ideal trade would be to wait for the downtrend to end and go long," he said in an interview to CNBC-TV18. He said short selling won't be a good idea. "Even position trades can simply be maintained and not added to." Valuations attractive, expect a rally in 7-15 days: Quantum
 
Below is the verbatim transcript of Sukhani's interview with CNBC-TV18. Q: What did you make of the pullback on Thursday? Do you think that the Nifty can head higher in the near-term? A: Thursday's pullback was anticipated. The Nifty is now deeply oversold and there are always two undercurrents in the market. One of them is the intermediate trend. The intermediate trend is down. We are moving lower. I do not think there is any confusion on that, but within that market will see pullback rallies, relief rallies, even sharp pullbacks. What we are probably seeing is the beginning of a sharp pullback on the upside. I would be comfortable going long. I was comfortable last week and even today. This is not going to be easy for short-term traders because the pullbacks will not come made to order. My point is that the trade should be on the long side. If there is a dip or a sudden intraday reversal, the ideal trade would be to wait for the downtrend to end and go long. I would be upbeat till the market is oversold, till it does not see some rallies. Short selling is probably not a good idea. Even position trades can simply be maintained and not added to. Q: HDFC Bank is in your buy list today? A: The reason is simple. The Bank Nifty led the rally one day earlier. While the Nifty did its bit on Thursday, the Bank Nifty actually gave indications on Tuesday itself that it is willing to get out of its deeply oversold position. That is good news. What it suggests is that most banks are now giving bullish patterns. HDFC Bank suggests that a very sharp correction or a very sharp bear market in it is now at least in a position to see some relief rallies. There was a very decent chart pattern on Thursday, something mildly bullish even on Tuesday, so that should see a follow-through. I would be comfortable buying HDFC Bank. The important thing is that the markets closed at the highs on Thursday and chances are we are not opening lower even though Asia is lower. Therefore, for the short-term trader it is important not to go headlong into the market, going long in the morning itself. Ideally we want to wait for intraday dips and they will come and then go long. Also Read: Eight blue-chips add Rs 44239cr in m-cap; ONGC top gainer Q: You are also buying State Bank of India (SBI) today? A: There were so many banks that were offering buying opportunities. It became difficult to decide which ones to go for. SBI is the leading bank in the public sector undertaking (PSU) sector, so it simply represents the best of the PSUs as HDFC Bank does and it is giving us mildly bullish patterns. SBI is also making some kind of a double bottom, in fact the Nifty is also doing that; went to 5,620-5,630, rallied to 5,930 and then came back to 5,630 again. SBI is mimicking the Nifty and even if the double bottom does not work out at least there is a sense that a rally will come, market will try to see how much leeway this double bottom is giving. Therefore, SBI is a good representative today for the entire PSU clan. Disclosure: Sudarshan Sukhani has no holdings in the stocks discussed. _PAGEBREAK_ Q: DLF is a short trade in your list? A: Yes. Most stocks are oversold because we can sell only Futures and Options (F&O) stocks when we are short selling. Most F&O stocks are deeply oversold. Therefore, it is difficult to identify relatively secure shorting positions. DLF, unfortunately now appears to be one of those relatively easy shorts. It has fallen a lot, after a decline a small rally started and that rally has been underperforming the real estate sector, underperforming the Nifty also. So, that looks like a bear flag probably DLF is going to lead on the downside so I would be comfortable selling it. Q: Tata Global Beverage has come back as a buy in your list? A: It has come back to a buy in my book because it is doing the double bottom pattern that a lot of good quality stocks are doing. It is difficult to say exactly whether this will work out or not. Earlier it did not but at some point these stocks will bottom out at least for the short-term. The market is now willing to go lower; participants are willing to see this market go lower. That never works out. Tata Global is not a day trade. If one buy it then hold a position for a couple of days. It is a very low volatility stock. However, buying is justified.  Q: Cairn India has been struggling and that is part of your sell list? A: We had a target between Rs 250 and Rs 270 but it was falling from Rs 320. The chart patterns sometimes work very well. It has reached Rs 270. It is no necessary for a stock to stop at a target price. It can always come down to the lower levels even exceed it on the downside or upside because Cairn’s chart even on Thursday was fairly bearish and downbeat. I think that decline to Rs 250 is coming. Therefore, Cairn still remains a short selling idea except that if one has some profits, take it because at some point support will come. Q: TV18 Broadcast is back in your buy list? A: I have explained how this stock and the group have disappointed repeatedly because it gives us bullish patterns and somehow they do not work out. TV18 is doing the right things on the charts. If history was not available I would have said it is an excellent buying opportunity. However, that disappointment has come. I am explaining this to viewers so that they should not go headlong into it. The charts are very attractive. It is making a W, which is a representative of a double bottom. It has done a very decent rally and I would expect it to give us at least Rs 29.50-30 and a bigger trend arises if it crosses Rs 30. These are all ifs. However, for a midcap stock, the charts are attractive and worth buying into. Q: 5,697, just sub 5,700, what kind of trade would you initiate on the Nifty? A: I would still go long. My problem is that after a decent intraday rally on Thursday, it was almost 100 points from the low. The market is opening higher so the window for a long position is not very attractive as we open in the market. Ideally we want to wait for an intraday consolidation or even an intraday dip and then take fresh positions, but positions on the long side are justified. _PAGEBREAK_ Q: Going into earnings next week, would you back HCL Technologies from IT? A: No, I would not. Theoretically the stock is at a lifetime high. It is a buying opportunity and we have to confirm a buy or a sell. There is no such thing in the financial market as avoid. However, HCL Technologies is avoid. It has already done its bit. So, going into the financial season I would not buy HCL Technologies. I would buy it only on a correction and that also after its results. Q: We have been talking about breakdown on Reliance Industries, what kind of levels would you see on that stock? A: Reliance has a strong support at Rs 750-760. It is almost there, another Rs 10 and it will be. So, my sense is that Reliance has done its bit on the downside. It is now a buying opportunity given a long-term support level where it is now standing at. Let’s put 20 points of risk and maybe 100 points of reward in Reliance. Therefore, my trade in Reliance would be to go long.    Q: Delta Corp has fallen a lot, is there more downside? A: There is more downside. It is difficult to say how much more but certainly another 5-10 percent, which means bring it to Rs 37 or even Rs 36. People who are bullish on Delta, the advantage now is that it has gone out of the F&O segment, so one cannot go short in it. One can only take intraday trades, which is difficult. Therefore, the trade is to sell it but since it is not easy now, not being in F&O, the key here is not to buy. Q: How would you trade Coal India? A: Coal India has done its bit. It has come down to a strong support level at Rs 295-300 and that was a downside target. It has almost reached there. I think the target was Rs 290 and we cannot be so particular about every single point. It is in that target zone for the decline. Therefore, Coal India is a buying opportunity. The reason why we are upbeat on the market is because stocks like Reliance even Coal India have to come support levels. These levels may eventually breakdown. I suspect they will, but not now. Q: What about Manappuram Finance, how would you trade it? A: It is a big disappointment. Manappuram was flying and it is now flying on the downside, more downside. At Rs 21.50 it can easily come to Rs 20 and crack it on the lower side. The key here is not to buy now. Q: Your views on Tata Motors? A: It is a sell. Even in this upbeat market, at least upbeat for me, Tata Motors is a short selling opportunity. Wait for small rallies. The charts are very disappointing and it comes together with the charts for other auto companies where visible signs of a correction are available.