Sukhani expects small corrections, advices buy

Some corrections seen today should be used as buying opportunities, suggests technical analyst, Sudarshan Sukhani of s2analytics.com.

"Traders must understand that there is no guarantee that this market will come down or go up, but we are watching some undercurrent of bullishness on the charts and that could last for 10-15 days," he said in an interview to CNBC-TV18. How charts of S&P and Nifty are looking right now Below is the verbatim transcript of Sukhani's interview with CNBC-TV18. Q: Is it a good idea to keep a long stance running on index or do you think this pullback has run its course? A: I think it is wise to keep a long stance running. Yesterday morning I suggested that we can close short positions on the intermediate trend hoping to reinstate them on a higher level, so at this point we do not have any short positions. The long positions also are short-term in nature, but the moment favours the bulls, so ride this momentum. We are technical traders. Traders must understand that there is no guarantee that this market will come down or go up, but what we are only watching on the charts is some undercurrent of bullishness and that could last for 10-15 days. I would assume that is the trend we want to ride. The small corrections are likely to come and these corrections should be used as buying opportunities. The last threshold will tell us that this market is not going up and that would be 5,700. We are way above that. Of course these levels will change. As of now the undercurrent is upbeat and we should accept that. See 10% upside in mkt in first half CY13: Antique Q: Do you think DLF has resumed its uptrend? A: Yes, it has resumed its uptrend. It did not even break its earlier lows while the Nifty was falling and crashing because the rally was strong, there was a correction. However, that correction held on very nicely. DLF is giving us a long-term buying opportunity, so we want to buy it whenever we can as short-term traders. There is a lot of tailwind for the long-term buyers also. DLF is a day trading opportunity. Yesterday’s rally should see a follow-through today. Even in a choppy market one will probably get it lower or maybe in a minor consolidation. So go long in it. Q: You are not that bullish on some of the public sector names yet, names like Bank of India (BOI). A: Public sector banks are divided in two parts. There is a group that is not rallying, that is not giving us bullish signs. Not making basing patterns, doing nothing. Unfortunately, BOI comes in that group. Yesterday’s small decline suggests that the two-day rally is over and if nothing happens BOI is likely to keep on going lower. In a choppy market stocks fall and some public sector undertaking (PSU) banks starting with this one are likely to be on the declines list. Disclosure: I have no holdings in the stocks discussed. _PAGEBREAK_ Q: Tata Motors has rallied close to 7 percent over the last three days. Do you think there is more strength going for that? A: Yes, there should be. This rally has come on the back of an equal decline, so it is really reinstating its earlier position coming back to levels where it was a few days ago. That has also made it into a trading range. It is on the verge of a breakout from that trading range. It is one of the better stocks. We have been upbeat on Tata Motors saying we should be buying it on dips. That applies. The breakout is likely and this time we are buying on a breakout, not on a dip. However, breakouts make money. Q: You are long on Gujarat Fluorochemicals today. A: Yes and that is a surprise. This company has come in our short list repeatedly. It has fallen like 9-pins. That seems to be getting over. It is now making a basing pattern and giving us a bullish head and shoulder pattern with a confirmed breakout. That is the beginning of an intermediate uptrend and these patterns are coming slowly in some of the other stocks, hence the sense that perhaps this market has some headroom before it starts going into a consolidation. Gujarat Fluorochemicals is an intermediate term buying opportunity. Day traders should go long in it. Position traders should build positions here. Q: What about Infosys? We were talking about it from a fundamental perspective. Looks like it is good to takeout Rs 3,000? A: It looks like that. We have been upbeat on Infosys when it was building its first base at Rs 2,400-2,500. It is now making new highs for this upmove. Yesterday it did that and that suggests there is more momentum on the upside. In a choppy market some stocks will outperform. We have seen IT outperform distinctly and that outperformance will continue. Infosys is the best among all the four large IT stocks as of now. Q: You have a sell call on Financial Technologies? A: This is a stock that does not stop falling. It keeps on coming down. A minor one day rally and one cannot have a one day rally as a turning point. It simply suggests that this was a small relief rally and the original downtrend will resume. I assume Financial Technologies will eventually bottom out at a much lower price than where it is trending now. This is a positional short. On one-two day rallies sell it and hold onto it. Q: What about index and how you would approach the trade. Looks like it is going to be a start around 5,800? A: I would a buyer in the index. We are seeing a mild downturn and that is expected. There is no rush to buy. However, whenever we see the strength towards the day, midday, afternoon then I would go long in the Nifty. This is not a time to go short. Individual stocks are giving us mild ripples of bullishness. This may not work out but that is the trade for the day. Q: Would you buy Housing Development and Infrastructure (HDIL) in the high beta space? A: No, I would not. HDIL’s chart is dismal. We had one day of a rally after 30 days of decline. It is not enough. The fact that this stock has broken the support levels suggests that until a base building exercise does not go on even intraday trading is not worthwhile. We want to trade in stocks intraday on the long side where there is a lot of support from long-term investors. This is not so. _PAGEBREAK_ Q: What do you think of SKS Microfinance? A: It is a much better chart. We had a sharp correction. However, that is still a correction. SKS rallied from much lower level so it corrected. For the last one month it is building the base and base building exercises are important. Yesterday’s rally should be build upon. It is a position trade rather than a day trade, but I would be a buyer in SKS. It is quite possible that it will go back to test Rs 200 again. Q: Your views on Punj Lloyd? A: One cannot buy Punj Lloyd because it flew for one day, 13 percent gain. It is not a good idea, in fact if it rallies a bit more and stalls, it has to stall then it is a short sell. I think it is a perfect short sell. It is just entering into a resistance level, half a day of a rally and then consider going short. Q: Your thoughts on Sun TV Network? A: Sun TV’s charts are getting little disturbing but so far the uptrend is intact and I am assuming this is a correction of some kind. I am upbeat on media stocks and three-four media stocks namely Zee Entertainment, Sun TV, Dish TV and surprisingly TV18 Broadcast are giving interesting chart patterns on the upswing. So, Sun TV would be a buy for me. Q: Do you think there is more downside on ITC? A: That is a difficult question of answer. I would not go short in ITC so that is easier to say. I would be a buyer in ITC. So, I do not expect a big downside from here. ITC, Hindustan Unilever will begin their upswings sooner or later. Q: How would you trade IDFC? A: IDFC is a buying opportunity. It has come to a strong support level and that is a deep correction that we saw. Go long in it.