Short-term bounce likely, long-term still bearish: Sukhani

Technical analyst, Sudarshan Sukhani, s2analytics.com expects to see a short-term bounce after last week's drubbing market received at the hands of poor local and global cues.

"Global developments are slightly conducive. We also have some technical pointers that suggest that a short-term bounce is likely," he said in an interview to CNBC-TV18.

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Below is the verbatim transcript of Sukhani's interview with CNBC-TV18.

Q: Terrible close last week but any hope from the global developments this morning that the market may see a sizeable bounce?

A: Global developments are slightly conducive. We also have some technical pointers that suggest that a short-term bounce is likely. At 5650, we found support. That was the earlier lows. Therefore, for two days we bounced around 5,650 and did not crack it. That suggests that at least for a short-term the earlier lows are holding. 

This week there is Futures and Options (F&O) expiry, two days of holiday and normally market does not give a V-shaped recovery. So, while the bias this week should be on the long side for short-term traders, I would not expect this upswing to be straight-line advance. The key here is to have a view that one should be a buyer. This does not change the long-term picture. The long-term picture remains dull and bearish but why to worry about the long-term for this week. 

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Q: You have a buy on Ambuja Cements?

A: Ambuja Cements has been in a bear market of its own as has been ACC, UltraTech Cement and the entire cement pack. On Friday we had a sharp recovery, which means that the lows that it was making were held and finally we saw a big move on the upside. That Friday’s recovery should see follow-through today because it is not just Ambuja, the recovery is now evident in ACC also.

These are short-term trades, which mean that the trend has not changed. We have seen Ambuja crack a lot. One day of upmove does not change a long-term trend but for a trader who is looking for today, tomorrow. It is a nice idea to consider going long in Ambuja. I am repeating again that we are talking of short-term horizon, which is what we do here.

Q: Do you foresee more pain in Tata Motors. It has lost more than 10 percent in the last six trading sessions?

A: I do think so and even the Nifty was to rally and it should. Tata Motors could be a distinct underperformer and it is a short selling idea. The stock had strong support in Rs 270-280 zone. It has broken that; Rs 280 was significant and that entire area. That is very worrying. I would expect more downside today and it is a short selling idea even in a market where the Nifty is inching up.  

Disclosure: I have no holdings in the stocks discussed.

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Q: You would sell Titan Industries today?

A: Yes, I would because the small attempt was primarily one big day and then for four-five days it tried to hold itself but it could not. We had a big decline on Friday. That small rally is probably a bear flag in an ongoing downtrend. Pattern targets for Titan are much lower. Therefore, I would not expect these rallies to be sustained for long. Titan is a short sell in an ongoing upswinging market, which we could see today, tomorrow. This stock remains a sell. Of course, we do not want to headlong into it. If one will see some rallies he will get better price to sell it.

Q: You are buying Sterlite Industries. Do you expect to see a bit of bounce in this broken sector?

A: Sterlite has done what the Nifty is doing. At Rs 88 it made a low, a small rally but at Rs 88 it found support at least for the last two days given a slightly better environment for stocks this week, Rs 88 should hold. We have some kind of a minor double bottom pattern there may not be sustained but at least for the short-term trader there is an opportunity. A lot of these stocks try to do some rallies on Friday and that got dissipated by the time market ended. That could again begin today. Therefore, Sterlite is a buying idea. there is a chance that the double bottom could get confirmed in which we could see decent rallies but even otherwise for the intraday trader expect some follow-through because of the double bottom support.

Q: Given how choppy and uncertain this market is, you think it is still a good idea to move to defensives like Hindustan Unilever (HUL) etc?

A: It is an excellent idea; Hindustan Unilever, Sun Pharmaceutical Industries, Dr Reddy’s Laboratories even Ranbaxy Laboratories after a correction. We are looking at HUL for buying today. HUL was one of the few stocks that closed lower on Friday. That is a bear trap, it is a trap set for bears because this stock has been rallying from Rs 430 onwards. While the Nifty was falling this was going up. I think the rally should now continue. The stock has now gone into a trading range and one could expect an imminent breakout from that range today. HUL is a buy idea and probably carry it for few days starting today.

Q: You have a buy in Dena Bank?

A: Yes and that is a surprise for me as we look at the charts. Dena Bank coincidently had the same support level as Sterlite; made Rs 88 low, bounce back and again on Friday held for the short-term to that level. Therefore, the first sign of a double bottom at least support level, which is holding is available. The Nifty’s rally is going to be accompanied by some sizzling in the Bank Nifty also. Dena Bank is a high beta public sector undertaking (PSU) stock. There is a possibility of some decent gain on the upside. The basic thrust is that one should be looking to buy today rather than sell although one could see choppy market.

Q: How would you trade Bharat Petroleum Corporation (BPCL)?

A: I would buy it and all the trades that we are discussing are primarily intraday trades for a couple of days. They are not about the trend. Today BPCL is a buying opportunity. It has fallen and come back to the strong support levels around Rs 365, a bounce is expected. I would be a buyer.

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Q: Your view on Indraprastha Gas (IGL)?

A: Indraprastha Gas is a far more conviction buy. It is not only holding out, it is also coming out of a very long trading range. The charts are choppy, sometimes they go all over the place but that is the way market behaves. It is a positional trade, not just a day trade.

Q: You foresee more downside in Reliance Infrastructure?

A: Although a context must always be kept in mind, I am not saying to sell it; we are only talking about the trade or the possible trades whenever the trade arises for Reliance Infrastructure, it will be on the short side. When the market is going up there is no need to go headlong and sell. However, wait patiently for a pause and then sell.   

Q: Your thoughts on Pantaloon Retail, which was down close to 20 percent last week?

A: Yes, Pantaloon also in a downtrend of some kind and lower levels are coming. Wait for market rally to end, today, tomorrow, in a couple of days, ten days and then Pantaloon becomes a short sell.

Q: How would you trade ITC?

A: ITC is a buy but I would not buy it because it has been rallying all the way through while the Nifty was coming down. The chances are at Rs 309-310 it is going to face a lot of resistance. Therefore, buy only on an intraday dip and then wait for couple of rupees or Rs 3 of gains, not much.

Q: How would you trade Delta Corp, which is very volatile?

A: It is very volatile but the direction is one-sided except for Friday. It is a short sell. A small rally in Delta Corp and consider selling it.