Avoid trading till Reserve Bank policy plays out: Sukhani

Technical analyst, Sudarshan Sukhani, s2analytics.com suggested traders to avoid trading till Reserve Bank of India (RBI) announces its policy and market reacts to it.

"If the market pulls back after Reserve Bank of India (RBI) policy is announced then day traders should not opt for it. The first half or whenever the after effect gets over I would not trade. After that the bias would still be on the short side," he said in an interview to CNBC-TV18. According to him intermediate trend for the market is still on the downside. "If there is a sharp upside rally then I will not trade that. I will wait for the rally to end and look to sell the Nifty."  Repo cut for now, govt spending key to CRR cut: Experts Below is the verbatim transcript of Sukhani's interview with CNBC-TV18. Q: In case we do get a bit of a pullback how would you trade it on the Nifty? A: I am assuming position traders should be short and they should be irrespective of what happens. For day traders a pullback is not a good idea to trade into. It is wise to step aside till the policy is announced and the market's reaction to the policy is visibly clear. Therefore, the first half or whenever the aftereffect gets over I would not trade. After that the bias would still be on the short side. If there is a sharp upside rally then I will not trade that. I will wait for the rally to end and look to sell the Nifty. As far as I am concerned the intermediate trend is down and the short-term trend is down. So, that is the trade we should be taking.    Lingering CPI inflation calls for caution: HSBC Q: You are buying Indiabulls Financial Services? A: After the sharp decline in most midcap financials the stock is making a base. I always like stocks that give a message that maybe the decline is over and are ready to go up with strong foundations. Indiabulls Financial is giving the first sense that at Rs 250-260 there is strong support and that support is reflected in some kind of a double bottom, head and shoulder, bullish and everything. So, this is a trade where we want to take advantage of a stock that may not do what the market is doing. Go long in it, try to go long intraday traders and try to go long as a position trade and put it in long list unless proved otherwise. Q: You are bearish on Sintex Industries? A: Yes. Sintex is choppy, sometimes it gives an impression that it is giving a one or two day rally and we also try to catch it but broadly the sense is it is breaking down from support levels. The final end of the decline is not yet visible. As I said in Indiabulls Financial, at least we saw the first sign. However, in Sintex those signs are not available. So, the trade here is still to sell it. It is probably some of these midcaps, which have been hammered, will take a lot of time before conviction changes on the upside. Disclosure: Sudarshan Sukhani has no holdings in the stocks discussed. _PAGEBREAK_ Q: You are trading long on Punj Lloyd? A: Yes, and that is a surprise because I have been fairly downbeat because all of them started collapsing. However, like Jaiprakash Associates, at some point Punj Lloyd stopped falling. It has made very neat pattern, a bullish head and shoulder and it is now breaking out. So, some midcap stocks, at least in the short-term maybe ripe for a rally. This is a day trade and a swing trade, do not over last the trade. Punj Lloyd is a high beta stock so sometimes one gets some money out of it. I would not trade anything unless the policy is very clear or rather I am not worried about the policy. The market’s reaction to the policy is very clear. If there is a mild bullish bias then these long trade should work out well.
 
Q: You are selling Bata India this morning? A: Bata is a consistent sell. We try to sell it and it comes down and then it makes a small consolidation and this consolidation is going to breakdown again. Bata had a disturbing chart on a longer timeframe. It has made a very strong distribution pattern, confirmed it. Bata went up from Rs 300 to Rs 1,000. A big part of that upmove is going to be retraced again on the downside. It is a very worrying chart. It is a short sell. Q: You were optimistic on Ambuja Cements a few weeks back but that trend did not work out? A: No, it did not work out. I was fairly optimistic. I thought cement is bottoming out, Ambuja, ACC, UltraTech Cement. However, one by one all of them have flopped. That is the advantage of being a technical trader, we do not get stuck to our views at least the flexibility is there. Ambuja is now breaking Rs 185 and that suggests that all possible support levels and the last one, which is Rs 185 roughly is now being taken out. It is difficult to imagine what cement has suddenly started doing, turned aside but the trade is to be short here. The trade is also to be short in ACC but Ambuja is a better candidate for the day. Q: You remain optimistic on Cipla? A: This is the trade of day. I am very optimistic on Cipla. Cipla has gone through a deep correction, made a basing pattern, a bullish pattern and it is now breaking out. We have already seen Sun Pharmaceutical Industries do well, Dr Reddy's Laboratories is also giving the right signals. This market seems to be rewarding high valuations. Market says it is willing to buy Cipla and push it back to Rs 410-415 levels easily. Go long in Cipla on any intraday opportunity and if possible try to carry the position also.   Q: What kind of trade would you put in or initiate beyond 5,850 level on the index? A: I have a single directional trade view today. The idea is to look for selling opportunities preferably and ideally after the event, but there is only one view, so I am not looking to buy. It is always possible that the market may start flying on the upside in which case we will be left aside. That sometimes happens. Any strong rally, any bubble-type intraday rally should be an ideal opportunity to buy Puts. Puts by themselves bring less risk. _PAGEBREAK_ Q: Do you see any problems creeping on the charts of Yes Bank? A: Yes Bank has now topped out, it has given the right classic distribution patterns and it is going much lower. This is going to be trade of the year. I think Yes Bank, IndusInd Bank even HDFC Bank to some extent, ICICI Bank, Axis Bank, all of them are going to see lower levels and once that led on the upside, lead on the downside. There is clear distribution available on Yes Bank. The trade is only one sided, look for opportunities to sell. Q: What kind of levels do you see on NMDC? A: NMDC is cracking all kind of support levels. It is soon going to go in a freefall. I would not be surprised if it goes into double digits. It sounds fancy at this time but the charts have turned horrible for it.   Q: How would you trade SKS Microfinance? A: I would be long in it. SKS Microfinance rallied from Rs 60-70 to Rs 200 and that is a bull market by any definition. A sharp correction, inevitable and that correction is now leading to another rally. It is in a base building exercise, a breakout from there. Therefore, it is a buying opportunity although I doubt if it will go up if the broad market comes down. However, the bias is still on the long side. Q: What kind of levels do you see on Shree Renuka Sugars? A: Shree Renuka has faced a lot of resistance at Rs 26.50-27 and I see an immediate decline to Rs 25.50 or even Rs 25. Therefore, the trade here is to go short. At current levels it is a good shorting idea. Q: Do you think the worst is over for Titan Industries? A: I do not think so. I think Titan eventually will go below Rs 200. For day trader an immediate target of Rs 235 on the downside. Therefore, it is a selling opportunity. The charts are horrible. Long-term charts are very poor so an eventual dip below Rs 200 is likely.  Q: Is GMR Infrastructure looking like a Punj Lloyd or it is avoid? A: It is looking like Punj Lloyd. These stocks have sprung up from nowhere. We had given them up for dead and now they are living alive and kicking. GMR has an ambitious target of Rs 21 and even Rs 22. It is doing right thing. It has already rallied 20 percent and that is the reason why we become upbeat on it. It has got some strength. I would be a buyer. Yesterday was a big day for GMR. So, wait for a dip -- that is a matter of strategy. Consider buying it.