Short-term traders may sell if Nifty slips to 5680: Sukhani

Technical analyst, Sudarshan Sukhani, s2analytics.com warns that the overall trend for the market is still on the downside. Short-term traders can opt for selling if the Nifty slips to around 5,680, he suggested.  

Key equity benchmark started the week on a flat note, reflecting hurt sentiment by a patchy global growth outlook and weak data from Europe. At 09.16 hrs IST, the Sensex was down 52.60 points at 18865.92, and the Nifty down 21.60 points at 5698.10.

"For short-term trader, it is going to be little choppy and there is a downside bias if this level is broken," he said in an interview to CNBC-TV18.

Below is the verbatim transcript of Sukhani's interview with CNBC-TV18.

Q: Looks like we have got a start in the red from what the SGX is indicating, how would you approach that as a Nifty trader?

A: The overall trend is still down and it is pity that Friday’s minor rally is going to be dissipated today but that is what the market does. I think my levels for the Nifty this time and the idea was that if we see more momentum on Monday, we will buy. However, this is not momentum on the long side. There is a level below which I would be a seller again for the short-term trader and that is a roughly around 5,680.

If the cash Nifty goes below 5,680, it is making new lows and short-term traders should also try to go with that kind of momentum. There should be some positions on the short side that are positional trades, they are being maintained. We are not finding any occasion to close them. For short-term trader, it is going to be little choppy and there is a downside bias if this level is broken. 

See 5600 as good support for Nifty: Anand Rathi Fin

Q: On your sell side, you have picked some public sector bank names like Canara Bank?

A: These banks are coming everyday. The broad pattern, the broad story in them is that they are going lower and they are just giving triggers one-by-one. Canara Bank has given us a trigger, on Friday it went and made low and also confirmed a fairly bearish pattern. They are doing it all of them. Canara Bank is a short selling opportunity. It is not just a day trade, it is also something that a trader can take position and carry it for sometime. It probably will work in both ends.

Q: Another one which has been cropping up on your list of-late is Aurobindo Pharma?

A: One of the pities of this market is that the midcap blue-chips have cracked out. Aurobindo Pharma was in an uptrend. First, it made a bearish head and shoulder, we said, let us sell it. Those targets are being met but while the targets on the downside are being met, a new bearish pattern has emerged; new lows have been made on the way down. That is not good news. I think, it has done all the wrong things on the charts, made a rounding top, a bearish head and shoulder, breaking down from support levels, giving a message that a much deeper correction -- it is deep already -- is still coming in.

Disclosure: I have no holdings in the stocks discussed.

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Q: You have got a sell on Sterlite Industries as well this morning?

A: Yes. It is not stopping anywhere. The last support level at Rs 95-96 has been broken. It is amazing how the metal stocks have performed, literally copy book. The technology sector was weak and after one-two day rallies, they start coming down again. So, Sterlite is a short sell and eventual bear market target for it could be much lower. That is when the Nifty bottoms out when. However, for the short-term trader, look for small gains but the gains should be coming. Every rally in Sterlite Industries is a sell.

Q: Bajaj Auto is a long trade today?

A: It is one of the better charts. When we talk about the morning trade, it is always important to remember context. If the Nifty opens lower and starts drifting and cracks 5,680 then the buying side of the list is not going to work out. So, short-term traders who trade on day-to-day basis must remember the context when they trade. However, if Nifty is little stable, Bajaj Auto is likely to be an outperformer. I would be a buyer here. In any case there is a reverse message always. I would not consider selling it.

Q: You see more upside in Wipro?

A: Yes. This is one sector and one stock, which could go up while the Nifty is coming down. So, here the context should be if Wipro is going up we want to be with it. I do not think we need to look at the Nifty here. IT stocks are doing their thing. Wipro is just coming out of a nice trading range and breaking out of it. It has covered up all the losses it has made on the back of the results. It has filled the gap. I think it is a nice chart.

Q: How would you trade Asian Paints?

A: Asian Paints had a sharp correction, found support at Rs 4,250. It is one of the few blue chip stocks that are continuing their rally. We will assume that this rally continues. If it does not and it need not because the way stocks are cracking and giving distribution patterns, this could come down. If it does, we have a stop loss. So, it is important to know if it works out there is a strong rally in the offing. If it does not then get stopped out, do not wait.

Q: Any trade around 5,700 zone ?

A: I would not trade anything intraday at 5,700. However, the trades will develop over the day. The traders should wait patiently for extremes to come. If one sees 30-40 point rally then that is the time to sell and 30-40 point decline from the open is an opportunity to buy. The trade still remains intraday, maintain positional shorts because this market is sliding.

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Q: Any trades on the rupee dollar because you sometimes trade that and that has come down to 55.20/USD very quickly. What do you see on the charts there?

A: Currencies has been a bigger instrument for trading than the Nifty in the recent weeks. We are long in all the currencies that the National Stock Exchange (NSE) trades in, the dollar, the yen, the euro and the British pound, which means that we are bearish on the rupee. The rupee has gone through a small correction and then the currencies have bounced back. Dollar, which is a primary trading instrument, a target of 57 is what we are looking at. Now the time is not easy to say but I think it will come.

Q: How do you trade DLF because that has been relatively strong till the correction sipped in?

A: Wait patiently for the market to stop falling and then buy it, which means I would not sell DLF. It is a stock that is coming out of a very big trading range. We want to buy it whenever that opportunity arises. I have been saying the question of context. One cannot buy when the market opens 20-30 points lower, one cannot buy anything.

Q: Titan Industries is one stock, which came out strong from the last week?

A: I would be a seller in it. I am assuming it is a two-three day rally. Titan is in a sustained downtrend. The sector is in a sustained downtrend, consumer durables are not favourites now. It will be a selling opportunity.

Q: Your view on NHPC?

A: Another big disappointment. It took three months for NHPC to go from Rs 22 to Rs 28-29 and it took two days to come back to Rs 22. What is going on in this market but now we cannot buy it. I will not even advice going short in it. Theoretically it is a shorting opportunity but one cannot sell after such a big decline. The bigger worry is what is going on when three months of gains can be taken away by just two days of declines.

Q: How would you trade Power Grid Corporation of India?

A: Power Grid is a buying opportunity. It is like the IT stock. It is probably something that one can buy irrespective of what the Nifty does. It is forming a base in Rs 100-102 area and Power Grid has its own rhythm. The chances are it is likely to move up and give some capital appreciation. So, it is a good opportunity to go long.

Q: Your thoughts on Bharti Airtel?

A: I should be a buyer in Bharti. I think Bharti is going to be an outperformer but the key is outperformance. If the Nifty falls 10 percent, if blue chips fall 15 percent Bharti may fall 5 percent. That is not going to be comforting to the person who listens to this advice and buys. So, like DLF, we want to wait patiently for the market to stabilise and then go long in it. The money will come by buying. 

Q: What is the maximum limit that you would give the market in any kind of pullback if the suggestion is that it is getting exhausted on the way down after a series of falls? In a pullback, how much ground can it reclaim?

A: If this market pulls back handsomely and then all of a sudden everyone turns bullish, we should be seeing 5,900. So, that is 200 points form where we are now. I do not see it go to 5,900; market momentum does not suggest anything of that kind. The problem is it becomes a self-fulfilling prophecy. If nobody is bullish then the market will not even go up. That seems to be happening now.

Q: Are you getting the feeling that sometime might have changed in a medium-term outlook of this market?

A: Yes, I am getting that thinking looking at the individual stocks, looking at the way the Nifty is behaving. We have target of 5,500 and we have talked about the possibility that the Nifty could bottom out at 5,000 and that now doesn’t appear very distant.