Expect market rally to continue; buy HDFC, HCL: Sukhani

After spending most of its time in red, Indian equties on Thursday ended in green with the Sensex gaining 131 points to close at 18835 and the Nifty gaining 41 points to close at 5683.

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Sudarshan Sukhani, s2analytics.com is bullish on the market going into next week. He expects the rally that started on Thursday to continue. "The bias should be to buy, buy breakouts, buy dips, I would advise avoiding midcaps that have run up sharply. Beyond that, even midcaps are worth buying into if the run up has not yet started," says Sukhani in an interview to CNBC-TV18.
When talking about stocks, Sukhani is bullish on Housing Development Finance Corporation (HDFC) and Hindustan Unilever Ltd (HUL). He however, feels Yes Bank is best avoided. Below is the verbatim transcript of his interview on CNBC-TV18 Q: A pullback seems to be inevitable at this point in time given how oversold we are in the market and there were some signs of that on Thursday as well, would you have a long bias as we head into the trading week?
A: The markets are deeply oversold. We have been falling for ten-twelve days relentlessly. So, this week was a period of consolidation. We didn’t go anywhere, this short week saw the Nifty move around 5,600-5,650 and finally cross that hurdle of 5,650 on the upwards.
Next week should be cheerful for bulls. I would expect the rally that started on Thursday to continue throughout the next week. The bias therefore should be on the long side. This does not change the intermediate scenario which is that we are in a downtrend, but we will have sharp corrections on the upside within that downtrend. We should enjoy those corrections while they last and they could be longer than we think. So, the bias should be to buy, buy breakouts, buy dips, I would advise avoiding midcaps that have run up sharply. Beyond that, even midcaps are worth buying into if the run up has not yet started. Q: Give us a couple of buy ideas that you would recommend in the upcoming weeks, since you mentioned that you would stay with midcaps but there could be some lucrative calls in the frontliner stocks?
A: That is right and a lot of frontliners are now giving us a confirmed bullish patterns. One of them is HDFC. It is also foreign institutional investors (FIIs) favourite. If the index goes up, HDFC goes up first. HDFC has given us a bullish head and shoulder, it has confirmed that pattern, I would expect it to move significantly higher. Next week should be an opportunity to go long in HDFC, buy on Monday after the first one or two hours or even half an hour elapses, buy on a correction throughout the week but stay with HDFC.
The second is Hindustan Unilever Ltd (HUL). On Friday there was a brokerage downgrade but that does not impress me. These downgrades and upgrades happen all the time. This stock chart is almost as good as that of HDFC. It has not yet broken out of a bullish neckline for the head and shoulder but beyond that it has done all the right things. So HUL is a buying opportunity. Just ignore the fundamentals at this point of time. Technically, it is poised for a very decent rally and these are index heavyweights. Q: Are you bearish on Yes Bank for the coming week?
A: I am bearish on Yes Bank. It has collapsed. It is in a downtrend and on Thursday when almost everything went up, Yes Bank fell. It has also made a small bearish flag and broken down from it. All-in-all at least on the charts, I am bearish on it. I am also bearish on private sector banks. Next week is different because we are going into a correction. So, it is far better to focus on the blue-chips.