See Nifty sliding to 5100-5150: Sukhani

Technical analyst Sudarshan Sukhani of s2analytics.com sees Nifty slipping to 5,100 to 5,150 levels, however he adds that this is not the beginning of a new bear market.

Traders already holding short positions should go short below 5,220, he suggests. "For those who have not, a rally is still a day trading opportunity to go short." he tells CNBC-TV18. Below is the edited transcript of Sukhani’s interview with CNBC-TV18. Q: How would you approach the day? A: Our suggestion was to go short below 5,220 for those who have taken that short position. It should be maintained for the day at least till the afternoon. For those who have not, a rally is still a day trading opportunity to go short. That is the smaller timeframe analysis, just for the day. But our bigger view is that this is still a correction. When we rallied, we rallied handsomely, 50-100 points up, big gaps, so the rally was something that the trend was showing. As we are coming down, the markets are quite choppy, we also get the up days, down days. The down days are sometimes little indifferent, sometimes they open with a gap as today. So, the contrast between the rallies and the declines so far suggest that we are coming down and a target of 5,100 to 5,150 was visible. We are reaching there, but it is not the beginning of a new bear market. Q: You have got a sell out on Central Bank today? A: Yes because it has horrible chart. It went up first, then rallied and then started a decline almost after making new highs. Stocks that do this V-Shaped rallies and then turn down into inverted V’s, they are bad charts to buy but perfect charts to go short. After falling for 10 days today it’s likely to open lower and that will be breakdown of a significant support level for Central Bank.
Banks are doing unusual things, some banks are out performers and clearly will suggest buying once the decline stems. Some banks you cannot touch and Central Bank comes in that category Q: You have a sell on Raymond as well for the morning? A: Raymond’s is a disappointment because the stock had a nice rally after an earlier decline but that rally immediately fizzled out at Rs 400. That was the earlier resistance, apparently the market refused to push up prices higher. Like Central Bank it immediately started a decline, which has brought it to Rs 375 although it is not in the same category because Raymond’s maybe going through a sharp correction and there is more downside here. So for a short-term trader there is an opportunity to go short today, it’s likely to have a lot of follow through on last week’s weakness and probably take some money out. _PAGEBREAK_ Q: What about Orchid Chemicals and Pharmaceuticals? A: Orchid after a big decline in Rs 110-125 range has made an accumulation pattern, a bullish head and shoulder; it's broken down above it. So while the morning weakness can also reflect on Orchid , which will probably happen. The trade here is to buy it on a dip and not worry too much about what the Nifty is doing because this seems to be ripe for a decent rally. Q: Would the say the same for Jain Irrigation Systems? A: Jain Irrigation first built a base and base breakouts are favourites for me because that suggests that smart money is coming in the stock. It had a decent rally, after that a flag like formation; a flag often comes about midway in an uptrend. So it broke out of that flag. I would say that a dip in Jain Irrigation represents a perfect buying opportunity. If somebody is willing to buy futures for July then do that. Day traders will get some money just for a day or two, buy Calls but go long. Q: Some of the midcap IT companies like Hexaware, Mahindra Stayam have been doing well last week, you have picked up Mphasis? A: Yes I have picked Mphasis because it fell, then  build a base, made a bullish accumulation pattern, made head and shoulder pattern, and then it has moved out of it. Stocks that build bases tell us that something interesting is going on there and Mphasis is now qualified for that. So at Rs 400, I think there is more upside here at least a target of Rs 450 and that is good, given the fact general weakness in IT stocks. So, here is an IT stock that is not only out performing the IT universe but likely to out perform Nifty also. We really need to pay attention because once the IT cycle turns then stocks like Mphasis would likely do far better.  Q: You have a sell call on Sun TV Network, you think its topped out for now? A: Yes, it seems so that enormous rally from Rs 200 to 300 and then one morning markets said no, this is not a good idea and started falling. So the rally apparently was only a bear market rally in an ongoing downtrend. I think Sun TV has stopped out. I would not be surprised if it at Rs 200 again but not now, the trade here is to be on downside to sell whenever you can.  Q: If we do see this gap down opening and we stay at 5160 or so what would the approach be for the rest of the day? A: The approach should be to remain short if you are carrying positions and to try and sell a rally. I don’t see this changing track today itself, which means after a rally, a decline towards the end of the day is quite possible. But too much should not be expected on the downside we are opening lower, so a modest target above 5100 should be set. _PAGEBREAK_ Q: We were talking about Bharat Heavy Electricals (BHE), what is the chart telling you there, does it have a floor at Rs 200-210? A: It has a floor and in fact it has significant support at Rs 220. Given today’s likely gap down it opens somewhere there and that is a buying opportunity in BHEL. Building basing pattern requires choppiness which it is going through but a higher highs, higher lows pattern tells us that the trend should be up. Q: Kotak Mahindra Bank was the biggest looser last week do you expect more selling this morning? A: Yes it looks like, it was a U-shaped decline suddenly the stock started distribution and broke down from the distribution, not up that is how it became a distribution. It is a sell. It is not likely to stem that decline so soon. Rs 540 even Rs 535 was possible. Q: You keep an eye on Jubilant Foodworks, what have you made of its recent movements? A: It has created so much confusion; first it gave the signs that it is not making new highs and I thought this is a short sell. But on Friday, it surprised everyone, stunned me completely by going through a sharp rally that took it across and broke above resistance levels. So on charts first there is some confusion, Friday’s price action tells us a rally towards Rs 1300 its earlier high is very likely. Q: Will Bajaj Auto's good ride continue today also? A: The good ride for Bajaj Auto will continue today as well. The turnaround on the results day was excellent and that tells us it found support and it bounced exactly from a technical support level. So I would be very upbeat on this stock. Any decline should be used as a buying opportunity. Q: What have you made of the moves in Dish TV India in the last few days? A: I wouldn’t go for it. I think it’s topping out. It reached this level then it corrected a bit. A second try has been made. A strong resistance is available in Dish TV and it is a short sell rather than a buy. In fact with a very low risk it is short selling idea. Even if nothing happens and it falls 5-7 points; a lot of money can be made. Q: How would you approach Pantaloon Retail for the day? A: I would be a seller in Pantaloon. The stock is topping out, it has not confirmed that top, so there is a caveat here but it is clearly making a pattern that I would treat as distribution. I don’t think its going to go up anymore on the retail news. It has done it so many times, people will probably forget it. Pantaloon is now coming down and the chances are it will come down all the way back to Rs 125-130. Disclosure: I have no holdings in the stocks discussed.