Take bullish positions if Nifty breaks 5320-5330: Sukhani

Indian indices continue to be in consolidation mode. The Nifty ended flat on Wednesday with 5,300 being the pivot point.

Technical analyst Sudarshan Sukhani of s2analytics.com told CNBC-TV18 that the market rallied to 4,800 to 5,300 without any kind of correction. So, he expects the market to drift lower and challenge the bulls. However, if Nifty manages to cross the threshold limit of 5,320-5,330 one should take bullish positions irrespective of the outcome, he suggested. Below is the edited transcript of Sukhani’s interview with CNBC-TV18. Also watch the accompanying video. Q: What is your sense of what the market is trying to do - consolidate in this range before it makes another breakup or is it losing steam around these levels? A: Normally I would have expected this to a consolidation before another breakout, but we must remember that we have rallied from 4,800 to 5,300 without any kind of correction. It is not normal. At some point we are going to see this market correct, drift and challenge the bulls. So it’s not easy to say exactly which way this is going. What is much easier is if it crosses this threshold limits 5,320-5,330 then bullish positions should be taken irrespective of the outcome. Q: Do you think Bajaj Auto is technically good for more? A: I think it’s good for a lot more. It’s been an outperformer in the two-wheeler and four-wheeler segment in the entire auto business and that outperformance doesn’t go away easily. Bajaj Auto has been consolidating in a trading range after having seen a deep correction. That trading range is on the verge of a breakout. It did breakout yesterday, and that is why one is going to see a continued strength in this stock. It’s also a good stock for position traders to own and hold. Q: You would buy Chambal Fertilisers and Chemicals today? A: I would buy Chambal but it has been very disappointing and very confusing. It gave an impression of an imminent breakdown just a few days ago and one was looking to sell it. That didn’t work out and now it’s suggesting that it’s willing to go up. One has to take long positions because the market’s undertone itself is bullish. Chambal is suggesting that perhaps the breakout, the move will be on the upside and if it works, then Chambal being a high beta stock sometimes, it just rushes up. So traders should take this position and also understand that the stop loss is meant to be used if it doesn’t work out.   Q: You are trading Reliance Capital on the long side today? A: Yes, in fact I was trading it since it was sub Rs 300. It has repeatedly come in my buy list and it’s been steadily moving up. Sometime the stock begins a trend and doesn’t stop. Reliance Capital is now in that position, there are no signs of trend exertion, every consolidation is preparatory to trend continuation and that is exactly what happened. We had narrow range in Reliance Capital yesterday and that suggests that a big breakout is possible today.    Q: You are cautious on Dr Reddy’s Laboratories? A: Dr Reddy’s Laboratories has run into resistance. It was going through a very deep correction. Yesterday, the current rally stalled in the Rs 1,680-1,690 zone, which is a very strong resistance for the stock. So, I would be relatively cautious on it and in any case pharmaceutical, FMCG stocks are sometimes giving the impression that they are likely to under perform, which is okay in a high beta environment. So Dr Reddy’s Laboratories is a short sell and chances are that one will see this correction that was seen earlier continue on the downside. Q: How would you approach Hindustan Zinc for the day? A: I would go long in it because it’s broken out and made a 50 day high and that is significant. Metals have been fairly choppy. I have been underweight on metals with a feeling that they will under perform. But there will be some stocks which do better than others and Hindustan Zinc is one of the better ones, so there is a buying opportunity here. At Rs 125, it’s on the verge of breaking significant support levels so if we see follow-through from yesterday’s gains then a position trader can ride a decent trend and for day traders a target of Rs 130 or even Rs 135 is possible. Q: You have a sell call on Tata Chemicals today? A: Tata Chemicals is a stock that doesn’t come usually in the list because its left alone and probably ignored. But Tata Chemicals has been a complete underperformer. It fell from Rs 345-350 to Rs 300 and when the market rallied 500 points Tata Chemicals did nothing. Now, after a small rally it’s stalling at the resistance levels of Rs 320. The chances are that it will make new lows. It’s a disappointing chart and it’s a good stock to go short in. even if the Nifty doesn’t go down, there is money to be made and if the Nifty goes down, there is lot of money to be made here. _PAGEBREAK_

Q: How would you approach trade around this 5300 mark? How wide a band would you keep on either end for the index today? A: yes the band is 5270 on the lower side and 5320 on the higher side. So we are now restricted to 50 points for the last three days and we are not going to trade anything inside this 50 points. It is just going to get chopped out; you will buy and then 10 points later you will start feeling that this is bullish or bearish, so there is no purpose in getting inside this band. The trade is beyond 5320 and below 5270. I have been giving these levels for three days and it sounds boring but that is the market. Q: You see more on Voltas after yesterday’s move? A: Yes the only reason I am a little worried is that we had very big move yesterday. Markets will usually consolidate; the stock will now chop around build a small base at higher levels and then make the next move. But yesterday’s move tells us that Voltas is completely out of the woods. It is now in the bull market of its own and we really want to buy. I don’t think we want to buy today unless we see some consolidation or correction. But the trade is clearly on the long side. Q: From real estate is there more traction in HDIL for the day? A: I would think so; HDIL is something that I had recommended yesterday as well. I had said we shouldn’t worry about the rally; it’s likely to move further. I think there is more upside even today. Real estate stocks are now on some kind of a roll and that won’t stop immediately. So HDIL, Indiabulls or even DLF to some extent should be bought into. Any intraday opportunity, any small narrow range in the intraday charts should be used to go long. Q: Is the run done on some of these oil marketing faces like HPCL? A: I think so, the run is probably done. First there is a significant correlation with Brent and Brent is not good news anymore and then we had very good rallies, What HPCL has done is that after a consolidation it has made an attempt to breakout and that attempt has failed. That is a warning on the charts that this upmove has probably come to an end. In the best case scenario we will see a distribution and in the worst case an immediate slide. Q: We talk a lot about the other infra names but the one that doesn’t come up for discussion is Punj Lloyd, are you beginning to see any basing pattern, a recovery over there? How would you trade something like that? A: I would be long in it. Punj Lloyd has completed its bear market. It made a very bullish head and shoulder pattern, it has broken down. We must remember it rallied from Rs 42 to Rs 55-56, so that is a decent rally for a stock that had almost given up. At this point Punj Lloyd  had given a very good upmove but the question is whether we want to buy it today. The answer with regards to Punj Lloyd would be that we could easily see follow through. So if the markets remain cheerful, if Punj Lloyd remains cheerful, it is a buying opportunity for the day as well. Q: The last 10 days have been quite constructive for DCB; you see it breaking out of some sort of range? A: DCB has already broken out of Rs 40 level, it has crossed that. Now it is building on those gains. It was in a trading range for almost three months. So, it is a fairly decent breakout, there was range which was wide enough to justify optimism in this stock. An immediate target of Rs 47 is possible but the more rally gains momentum the stronger it becomes. So Rs 47 could be and immediate target and DCB could eventually cross Rs 50 Q: How would you approach Dish TV India for the day? A: We have been upbeat on Dish TV and given it in our buy list repeatedly. Yesterday, it has a dramatic move on the upside and that is a warning that short-term traders should now take profits. For people who hold positions, and are looking for the big pull Dish TV is just entering a bull market, so there is much more upside. I wouldn’t go and buy it today if I were looking at a one-two day trade. I would wait patiently. For those who have the patience the next target is Rs 72. So if you get it Rs 2-3 lower that is the time to buy it and look for decent gains. Disclosure: I have no holding in the stocks discussed.