Till Nifty crosses 5250 buy on dips: Sukhani

Technical analyst Sudarshan Sukhani of s2analytics.com expects the Nifty to breakout either on the upside or downside going ahead.

"It’s been flat for two days now and it’s difficult to say when the market will breakout one way or the other. But it will," he said in an interview to CNBC-TV18. It was completely lackluster session for the markets on Wednesday due to lack of local and global cues. Nifty rose 11.50 points to end at 5,240.50 levels.
One should go long with normal quantities if Nifty takes out 5,250 until then keep volumes low and buy on dips, he suggested. Below is the edited transcript of Sukhani’s interview with CNBC-TV18. Q: It’s expected to be a flat day of trade. Do you think an intraday trading idea would be lucrative at all? A: It’s been flat for two days now and it’s difficult to say when this market will breakout one way or the other. But it will. If momentum is mildly on the bullish side, intraday dips should be bought into and short sell should be taken only if the Nifty goes below 5200. I am not saying it will, but till then short selling is not justified. So the trade essentially remains, if the Nifty takes out 5250 then we must go long with our normal quantities. Till then keep volumes low, buy the dips. Q: Pharmaceuticals have been doing well. Today it’s Aurobindo Pharma on your list? A: The stock saw a very sharp correction. After that correction, some kind of a rally has started. But we are anticipating that this rally will gain steam. Unlike other stocks like Lupin and even Sun Pharma which are at new highs, Aurobindo Pharma is not doing that. But the first signs of at least a decent rally are coming in. So, this is really a buy at support trade. If it works out we are actually getting at the lows. It’s a good trade to be in because the sector itself is very cheerful. Q: Brokerages are concerned about M&M’s sales trajectory. Do you have a sell call on the stock technically as well? A: Yes, technically also M&M seems to be weak. Apparently it’s making some kind of an intermediate top. So, there is more move on the downside. The downside, even if it’s a correction it is probably tradable. Today, assuming a choppy market environment some stocks will go up, some will come down and M&M is likely to be one of those which will come down. So, we are looking to have a short trade here. Q: The other sell in your book today is Jubilant Foodworks? A: Yesterday Jubilant Foodworks had a very small rally, but otherwise it’s almost ready for a big crack on the downside. It’s tried this earlier and then it bounced back. But the bounce backs were lower. So, we already have a pattern of lower highs. At Rs 1,115-1,120 Jubilant has strong support. It’s sitting almost right there and the chances are that the yesterday’s rally was just a relief rally. The downside pressure is much more. So, today at some point inside even into a rally Jubilant becomes a short sell. We don’t worry that it’s Rs 10-20 higher today. That’s all the way better for getting a better price. Q: What does the chart of MphasiS tell you for the morning? A: MphasiS is making a breakout and going into new highs for this uptrend. MphasiS earlier also had come in our buy list. There is something going on in midcap IT which is very attractive for bulls. MphasiS probably is one of the better charts in that group. I would say that’s relative. But it’s a good chart. Even if it doesn’t breakout today the chart suggests that it will breakout in the next few days. We take this trade. Assuming it does move up, we hold onto it, make it into a swing trade, otherwise we are ready for another up move in the next few days. Q: HDIL has been moving higher over the last couple of days. What are your targets on that? A: HDIL’s targets are quite nice. First target is Rs 86 and I would assume that it will cross Rs 90 eventually. Rs 86 is a day trading target. What happened is that DLF also came in our buy list. There is something in the real estate section. We have seen a correction. That correction maintained its higher lows pattern. After a correction if the trend is up we assume that a trend would resume. That’s exactly what is assumed in DLF. It’s the same assumption in HDIL. Both the stocks are probably outperformers in the real estate space, especially in the F&O segment. So, HDIL is a buying opportunity not just for today. I think swing traders or position traders can take a position and wait for it. Eventually it should go up. Q: You have a buy on HDFC. A: HDFC has been a laid back stock for most of this year. Now it’s started a rally. If any meaningful Nifty rally is going to begin from here and it could, I don’t know then HDFC will be a major participant. It’s a heavyweight, it’s very easy to push up and it’s on the verge of a breakout. Technically, it’s ready for an up move. Psychologically, like ITC it should be a major participant in any rally that starts now. So, it’s wise. You can buy calls, buy a Future or just take day trades and say okay. If the Nifty is going up HDFC will distinctly outperform. _PAGEBREAK_ Q: Rural Electrification Corporation (REC) had a big move yesterday is it good for more? A: It is good for more and much better chart. REC and PFC have completed their bear markets they are on the way to making significant gains and the gains won’t come in one day. After REC’s big move yesterday we could see a choppy day today or a couple of days, even next week. But these dips have to be bought, the charts are excellent. Q: The losers yesterday was Coal India, would you buy into that dip? A: Not now because I don’t think the dip is over yet. Coal India’s correction is probably going to continue till it finds support in the Rs 320-325 area but there it should be bought. Q: What is the chart of Balrampur Chini telling you? A: Balrampur is very close to its support levels of Rs 50-51 and we made Rs 53.50 which is roughly where the support is. Following the Nifty, these sugar stocks have also gone through a correction and that correction appears to be over. That is the sign we got in Shree Renuka Sugars yesterday and Balrampur is  suggesting the same patter and if that is so, then the stock is a buy. When we buy after a correction, the chance of the correction continuing or converting itself into a downtrend is always there, So we have to keep a stop loss and assume that the trend will continue on the upside. Q: How would you approach Manappuram Finance for the day? A: I would be a seller in Manappuram at higher levels, one cannot go and short sell it but it is not a buying opportunity. So at Rs 34-35 it is a sell. Q: Voltas after its numbers may start soft today but where do you see strong supports here? A: I assume that on the basis of charts the support comes at Rs 100 but if it opens below Rs 100 or slides quickly below Rs 100, then all long bets are off. Q: What would your approach be for Oil and Natural Gas Corporation (ONGC)? A: The approach in ONGC is go and buy it at every occasion, at every dip. This stock has bounced from Rs 240 and it is now in a trading range almost willing and ready to breakout. So ONGC is a part of portfolio. I think the eventual targets for this should be Rs 350 and sooner rather than later.  Q: What would be a good instrument to be positioned on the Nifty right now, given its quiet up move and given expectations of resistance which lies overhead? A: It has to be Options and at this point while we are mildly bullish but the bigger trade is to buy an Option straddle, we are buying Puts and we are buying Calls. This narrow trading range will not hold. Expiry is on August 31, so there is a full month left and this market will surely go somewhere up or down. I am open to the idea that it will actually go down, we haven’t crossed 5350 yet and that is the sign that this market is going up but we haven’t done that. So Options are the best instrument. For day trade there is a mild bullish bias but the bigger trade is to buy both ends and then wherever it goes, we must follow that trend. Disclosure: I have no personal holding in the stocks discussed.