Maintain short trade or go for day trade: Sudarshan Sukhani

The Nifty is moving in a 20 point range on the upside and downside. According to Sudarshan Sukhani of s2analytics.com, sometimes the impression is that this is not working out but the correction is very much on. “We must look at the context. The context is that American markets are up but it does appear that this market will remain mildly down.”

In an interview to CNBC-TV18, he continues to stand by his targets of the 5,100-5,150 range, probably closer to 5,100. The trade is to either maintain short positions or to go for a day trade on the short side, says Sukhani. Below is the edited script of his interview with CNBC-TV18’s Udayan Mukherjee and Mitali Mukherjee Q: A word on the Nifty? A: It is moving in 20 point range on the upside and downside so sometimes the impression is that this is not working out but the correction is very much on. We must look at the context. The context is that American markets are up but it does appear that this market will remain mildly down. I stand by my targets of 5,100-5,150 range, probably closer to 5,100. So the trade is to either maintain short positions or to go for a day trade on the short side. Q: You have chosen Reliance Capital on the short side? A: Yes, all Anil Dhirubhai Ambani Group (ADAG) stocks had a decent rally and that seems to be over. At the worst, the rally could have been a relief rally and will start a big decline but at best, a deep correction is in the offing. So either ways there is more on the downside. The sell off is just a beginning of what could be a move towards lower levels of support which is much lower. So Reliance Capital is a stock for the short sell today. It is suggesting that 20-30 points of more downside are available. Q: Pantaloon Retail looks like a weak chart to you? A: Pantaloon is not only a weak chart but it also made a bearish distribution pattern and confirmed it. That suggests that the rally from Rs 140 to Rs 200 is over and a big decline is in the offing. One cannot say whether that decline cracks Rs 140 or not, but the pattern is tradable on the downside; not just as a day trade but also as a position trade. So traders should be alert on this, take positions, buy Puts, sell Futures but go for a short trade. _PAGEBREAK_ Q: You think Rural Electrification Corporation (REC) is a good bet? A: I think so. Rural Electrification Corporation had a big decline. It was a bear market. Then it retrieved itself from the bear market by making a bullish head and shoulder pattern. I like the stocks that build bases and then move up and such stocks suggests that smart money was buying when it was going through a process of accumulation. So it is always wise to stay with smart money. There was a very narrow range in REC for the last seven-ten days and that’s a flag. If that is a flag then REC’s rally is going to be spectacular from this point onwards. One doesn’t know but it is worth buying and finding out. Yesterday’s price action suggested that REC is good for an up move. If the Nifty is going down then this is not going to work out soon but REC will still move up once the Nifty rally starts. Q: You are buying Crompton Greaves today? A: Yes, because in a choppy market there will be some stocks that will go up and just like REC, Crompton Greaves is probably a better stock to own on the long side. The Rs 100 mark was held. Now it is going up and it’s going up in nice fashion; higher highs-higher lows. It goes up then corrects. Yesterday was a narrow range day and because the trend is up narrow range day should end up resolving themselves on the upside. So I would be a buyer in it. There is no rush to buy in the morning for all the buying opportunities. One needs to see the market and if the markets are stable then some of these stocks will certainly move up. Q: You are bullish on ITC? A: Yes, ITC had a nice rally yesterday and that held the Nifty - ITC, Bharti Airtel - otherwise the Nifty would have been much lower. But ITC now suggests that if the Nifty is going to go up from here, then ITC will be a distinct out performer. This market would turnaround and take on 50 points upmove then one should go for buying ITC because that should probably outperform distinctly. Q: You have a sell on Hindustan Oil Exploration Company (HOEC)? A: HOEC has a disappointing chart like Pantaloon. There was a big rally from Rs 92 to Rs 130 and that rally is over. The patterns are clearly distribution. A head and shoulder pattern is now has been confirmed, that’s bearish, it is breaking down. So whether it comes back to Rs 90 or not is a question mark but it’s going to go down significantly. A positional trade can also be taken on short side here. Q: How would you approach the Bank Nifty? A: The out performance in the Bank Nifty seems to be over now, which means if the Nifty slides down then the Bank Nifty will participate in the same fashion, which means it’s a short sell. So rather than selling individual banks some of them are now suggesting some downside but that is a difficult task. It’s far easier to sell the Bank Nifty. Some of the banks will crack and the index itself will be lower. As of now the idea is to sell the Bank Nifty, not try to do any bottom fishing in banks. Q: Is Reliance Communications looking weak as well? A: Yes, it is looking weak and it’s a pity because I always thought that Reliance Communications could be a multibagger but that is not proving to be correct. The next target for Reliance Communications is Rs 35, I do not want to discuss because it’s almost implausible and impossible but is what it is suggesting now. _PAGEBREAK_ Q: What is your view on Bajaj Auto? A: The stock is cracking down and it was one of the better stocks in the universe, so that is a pity. But yesterday’s big decline has broken all major support levels. So we are really looking at lower levels in Bajaj Auto, Rs 1400 for starters but probably even lower than that. The point is that some of the blue chips needs not be shorted, theoretically yes but you need to wait for them to dip and then buy it. Q: What will it be long or short today, have you made up your mind? A: Yes, it is still short. It is always possible that this market can turnaround during the course of the day to stage some kind of relief rally and we are open to it. If that happens then we will get out hoping to sell at higher levels. At this point levels at which exit, are not clear but it would be somewhere around 5230 approximately. If the Nifty starts crossing it, we will pull out of the shorts and then wait again for higher level to sell it, Q: Sugar had a rally and started selling off again, is Shree Renuka Sugars headed even lower? A: Yes Shree Renuka is headed lower. After the rally the sugar stocks were consolidating for 15 days but as we now understand that was distribution. Yesterday they all cracked. On the back of news sugar prices are going up and all the stocks have come down, so clearly the news was very well discounted. Much lower levels are coming in sugar. It is a very speculative sector at the very least. The only trade here in all of them is to go and sell it. Q: How about something from infrastructure space like Lanco Infratech? A: I have become a big fan of Lanco on the long side but this stock is going to correct. So a correction from Rs 14.75 could bring it to Rs 13.25, there is a 10% downside. A trader who is a short-term trader a nd is nimble enough can take advantage and go short in Lanco hoping to catch this down move, at least part of it. For most others who cannot do short selling or are not actively participating it is better to wait it out. Let Lanco come towards Rs 13, then go and buy it. Q: Your view on Tata Consultancy Services (TCS)? A: TCS has a very dismal chart at Rs 1200, which was the support for it was holding for many months around 8-10 months. Two days ago it cracked that level and that is very disappointing. TCS is now suggesting that immediate target for it is Rs 1130 and probably going to go below Rs 1100. IT is not something you want to buy. You would want to sell it, if it opens 1% up today that will be good. We wait patiently and go and sell it, Buy Puts, sell Futures, the trade is on the downside. Q: Is Crompton Greaves still building its base? A: I think so and in that base building process there will be rallies there will be some dips but broadly the higher highs, higher lows  pattern is intact. So Crompton is one of the few stocks I would look to buy. Most others are short selling ideas. Q: How about Arvind from textiles? A: Arvind has broken support levels just as Bajaj Auto did or TCS did in a different form.  Yesterday it fell a lot and there was intraday rally which fizzled out and then the exact reverse happened. So Arvind mills is again a short selling idea. Disclosure: I have no holdings in the stocks discussed.