Nifty to remain choppy; buy on dips: Sukhani

Technical analyst, Sudarshan Sukhani of s2analytics.com shared his reading and outlook on market and specific stocks. He believes the Nifty is likely to remain choppy.

"Trade should essentially be kept on a day trading level but we will see how long this trend lasts. At some point it is going to be exhausted," he said in an interview to CNBC-TV18.
 
Below is the verbatim transcript of Sukhani's interview with CNBC-TV18. Q: Give us a trading call on the Nifty today? A: The Nifty is likely to remain choppy. I would say that because we are in a short-term uptrend, the bias should be to try and buy it on dips. If we see a breakout, if the morning opens 20-30 points higher, that is not the buying opportunity. Trade should essentially be kept on a day trading level but we will see how long this trend lasts. At some point it is going to be exhausted. I do not think we have entered a bull market. It is just a relief rally after a big decline. Nifty to retest 6030; pullback not more than 5950: Thukral Q: Adani Enterprises is in your buy list? A: Adani Enterprises came as a buy earlier also, few days ago. This stock seems to have bottomed out and the signs of bottoming out came when we had some kind of a double bottom. It was bear trap. The second leg went just a little below the previous low and quickly bounced back. That suggests that a V-shaped recovery is coming, which means fast rapid rallies on the upside and that is coming about. So, after yesterday’s gains the chances are that the stock will build on it. There is a lot of headroom. It fell a lot and it could easily go to see earlier levels. That is a positional trade as well as a day trade. Q: Do you think Mahindra and Mahindra’s (M&M) correction is over? A: It does appear so. While the market was going up and down, M&M was simply trading in a narrow range. That range has been broken on the upside. So, as the Nifty remains cheerful, but that could take fairly reasonable amount of time, some stocks will go up. M&M because of building of a small base at lower levels suggests that an attempt to again go back to Rs 980, even Rs 1,000 is possible. For today M&M represents a buying opportunity. A breakout normally sees a follow-through. Market may not hold last week's gains: Religare's Patnaik Disclosure: I have no holdings in the stocks discussed. _PAGEBREAK_ Q: You are short on Sterlite Industries this morning? A: Metals are doing nothing. We have seen small rallies in metals and they were not tradable, in the sense only a short-term intraday trader could buy it. The charts do not suggest that this decline is coming to and end. Sterlite rallied and could not cross its earlier highs also, so there was no pattern of higher highs-higher lows. The Nifty has done that but Sterlite could not. Yesterday’s small decline is going to be sold into and see further lower levels. That applies to most metals like Hindalco Industries, Tata Steel, Steel Authority of India (SAIL) but Sterlite is the stock of choice for today for selling. Q: How would you trade Indian Hotels Company? A: Indian Hotels has come on short list earlier. The hotels are nice but this stock is doing nothing and the market is giving a thumb down. Repeatedly it is a breaking support levels and going and the same thing has happened again. The last support has been broken. I do not know where the downside targets will be, for the short-term trader it is Rs 56-55 but eventually a positional trader could see even lower levels. Q: You have chosen GAIL India on the long side from oil and gas space. A: It is an excellent chart. The stock has fallen; it had a V-shaped rally, a V-shaped decline. That seems to be behind it. For the last 20 days it has been in a trading range, it has made all kinds of bullish patterns, a double bottom and it has made a bullish head and shoulder pattern. Multiple bullish patterns suggest that this stock is moving up. That is also surprising given the fact that oil and gas in general is an outperformer, we have talked about Reliance Industries, which should be an outperformer again, Oil and Natural Gas Company (ONGC) even the oil marketing companies are looking good. So, of all of them GAIL has very attractive chart patterns. GAIL is not a day trade. My suggestion is to go long in it and stay with it. Q: DLF is back in your buy list? A: DLF comes back in the buy list. It is on the verge of a breakout, new highs for this uptrend. The earlier bull market had seen fantastic numbers earlier but DLF is a consistent buying opportunity. Buy it on dips, buy it on breakout. Q: Any immediate target you would set on the upside on the Nifty? A: Not really because the index is choppy and the targets are difficult to come. What are easily available are the resistance levels. We have 5,940-5,980-6,000. So, the choppiness is likely to continue while the index tries to cross these resistance levels and that may not come about immediately. Assuming that the Nifty reaches 6,100 and that is possible. These 150 points is not going to be easy to make money in. so, the easy money has been made and traders need to keep that money rather than give it away in whipsaw and choppy market. Whipsaws can take a lot more money than we imagine. It is irritating to say this because one want to trade everyday, every hour but sometimes keeping earned money is also important. _PAGEBREAK_ Q: If somebody is holding on to long positions now and is reluctant to book out or check out with profits, at what point would you advocate a strict stop loss where all long positions or profits need to be booked? A: That would be 5,880 and that does not mean that the Nifty cannot rebound after going below 5,880. However, as traders one has to have the discipline to get out. So, at 5,880 the trader would still be making a lot of money because the long positions were build around 5,700 but below 5,880, I do not think any long positions are justified because then we are in no man’s land, we do not know where the Nifty will go, at least currently we have some sense that the markets can inch up. Q: At any point would you consider short trade either an aggressive one if the market moves up beyond 6,000 or on a breakdown below 5,880 or is the short position not advisable in this kind of market environment? A: It is. If the market goes towards 6,100 traders would be justified in building short positions using 6,100 April Puts. Intrinsically options have low risk because the value of the option is the stop loss. The call I am making is that the market are going to stall somewhere or the other. I would certainly start building short positions if the Nifty were to go at 6,100 or close by. The second level is 5,880 below that I would be aggressively short. Q: Some of the bank names have been pushing back though; State Bank of India (SBI) is up about 6-7 percent in the last week, anything that stands out from the banking universe? A: Axis Bank. State Bank of India’s rally is not enough because while everything is up because the Nifty is up, SBI has failed to cross its last high that means the pattern of lower highs is intact. Th 6 percent is just a relief rally. It has not convincingly done anything to say the trend has changed. Axis Bank’s charts are little more interesting. For some reason it is outperforming ICICI Bank but I would be reluctant to take any long positions at the current Nifty levels. Day trading is good. Sometimes a stray stock can be bought into for a carry forward trade, beyond that it is better to be careful. Q: How would you trade Tata Motors? A: Tata Motors could represent a buying opportunity. It is at Rs 305-306, at the verge of a breakout. It has not done that, it may not. Three times it has come back from this level to Rs 285-280 and this time, the fourth time it could do the same but if it does manages to cross that hump then that is the trading opportunity, not investing but it is certainly a trading opportunity to go long. It is easy to trade this. Just watch the levels, if they cross, buy it.  Q: What has been going on for the last couple of days is just a pullback in IT after such a strong performance or any signs that they are topping out in the near term? A: The topping out signs have not come but they have to top out at some point of time. So, this pullback is not something I would buy into. IT has had a straight line advance and that has contributed significantly to the Nifty’s rally. So, the pullback to be leave alone. They are not shouting opportunities by any stretch of imagination but that is not a buy. The chances are they go into consolidation, become choppy and very messy.  Q: Your views on the currency and whether that you think has snapped its losing streak or are you still working with the short stance on the rupee? A: The short-term position is to be long on the rupee and that change on a day to day or even on a couple of day basis. However, the stance is that the rupee is likely to reach 57/USD sooner or later. So, volumes on the short side when we sell the rupee are larger as compared to when we want to buy it.