No shorting opportunities with Nifty above 5000: Sukhani

Since the Nifty has held above the important support level of 5000, even on an intraday basis, Sudarshan Sukhani of s2analytics.com does not see any shorting opportunities in the market.

“There is no justification for going short because that would be going against the trend,” he said in an interview to CNBC-TV18. His trade for today is to go long whenever an opportunity presents itself. However, he warns that the gains won’t be spectacular. “Expect small gains on the long side, not a big stunning 100 point gain,” he said. Below is an edited transcript of his interview with Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video. Q: How should a Nifty trader approach trade this morning, with a shorting bent of mind or do you think there is the possibility or the potential for a bounce back? A: I don’t know about the bounce back coming in place today itself, but the approach should still be to go long whenever the opportunity arises. Expect small gains on the long side, not a big stunning 100 point gain. If you get an opportunity, if the market shows any signs of strength, go long. This market is not yet a shorting opportunity because levels are still being maintained. We have 5000 at support, that hasn’t broken down even on an intraday basis, so there is no justification for going short. Yesterday’s price volatility has caused some panic but that’s going to happen now. Q: You have couple of large caps buys like L&T? A: Yes because my view is that the markets will eventually go higher and I have long positions in a positional trade. So there are some positions still there. L&T becomes a buy, it’s one of the bigger heavy weights in the Nifty, the charts are much better. Yesterday’s decline is just a blip. We have to see the decline in context of the rally that we have seen and markets will come down. So this is a buy on dips approach. For an intraday trader he should be watching L&T for the first 15-20 minutes and if he sees any signs of strength that’s a trade he should take today. Q: You would say the same of Bharti Airtel? A: I would say the same of Bharti. Everything fell yesterday so it’s no big deal but Bharti has rallied from Rs 280, it’s holding on to those levels. It’s making a chart pattern that suggests that any breakout will give it another 20-25 points on the upside whenever that happens. But after this decline, some stocks are going to go up even in a choppy market. So the idea was to identify heavy weights that are likely to outperform today and Bharti is one of them. I am looking to go long there either using options or futures depending on how it works out. Q: You are cautious on some of these consumer stories, Godrej Industries is a sell? A: Yes that is a sell and it’s been a sell earlier also, it’s coming down. Broadly the consumer space and the pharma space is now suggesting signs of distribution. I have explained my views earlier also. Godrej Industries is a short sell. It is not necessarily in a bear market but it’s likely to go through a deep correction as I assume markets will go risk-on slowly. There is money on the downside; it’s also a hedge if you are taking long positions. Q: You suggest the same for something like Bata India? A: Yes, Bata had a dream run. It rallied from Rs 150 to Rs 800 plus. It is not a bear market but Bata can correct 200 points and not change its trend, it can still remain in a long term uptrend. That’s exactly what I think is going to happen. Bata is now a trade on the short side. Those who are uncomfortable must remember not to buy Bata as of now. But for most traders, it’s a good idea to sell into these rallies. Bata is now showing a lot of weakness, there is money to be made here. Q: What kind of markers do you set intraday for the Nifty today? A: we are looking at a dip towards 5025-5030 and if that dip does come then that would be a buying opportunity because we have tight stops just below 5000. That is the trade we are looking at; the expectations are very modest, looking at 30-40 points for even less. On the other hand a rally to 5080 would tell us maybe we will cross 5100 and this is the broad marker for the day. Essentially the trade remains to be on the long side. _PAGEBREAK_ Q: Would you buy the dip in ICICI Bank? A: Yes I would buy the dip and that requires some waiting because Nifty needs to stabilize but if the Nifty stabilises today then I would buy that big dip in ICICI Bank because the targets for ICICI Bank remain valid on the higher side and a dip is just a dip. Q: Technically how does Reliance Communications look because we had big 5% dip in it? A: Technically it becomes a short-term sell, there are downside targets towards Rs 61 which means if the markets are not behaving well then RComm could out perform on the downside. So there is trade on the short side here. But if the markets do begin to move, in that case short positions should be taken with care. Q: You are cautious on consumer durables but what about ITC? A: ITC is making lifetime new highs, so my analysis that it will under perform means nothing. But the trade here is go long; anything that makes life time highs has to be bought into. Although it is no relevant, it does appear that HUL is going to out perform ITC. Q: How about S Kumars after yesterday’s fall? A: You have to sell it because it rallied from Rs 24 to 36. The tremendous 50% rally was something that was unexpected and the markets are now giving a big thumbs down that yesterday’s 9-10% decline is not good. So first exit long positions and second look to sell on a small rally. Q: How is the chart of GVK Power looking to you now? A: The chart of GVK Power is looking nice. It went through a trading range for almost one and half months then broke out. Stocks that build bases, break out are the best stocks to be in. Then it had a very sharp rally, it is now correcting. I think this is only a correction and that base breakout theory still remains valid. So GVK is a buying opportunity a modest target is Rs 15 but eventually it should go to Rs 18-20. It is a very nice stock to be long in.