Mkt to be choppy; buy ITC, JSPL: Sukhani

Sudarshan Sukhani, s2analytics.com expressed his views on markets and stocks in an interview to CNBC-TV18

Also read: L&T finds it difficult to divest stake in infra arm IDPL Below is the verbatim transcript of his interview Q: Yesterday we saw a bit of a sell-off. Do you think profit taking could continue today ahead of the weekend? A: It is difficult to make a call on whether profit taking will continue throughout the day. It is easier to say that markets are choppy and we will probably see lower levels from yesterday's close at some point during the day. There is a short selling which was given yesterday for the Nifty, only for professional traders just for a day. We could see 30-40 points on the downside which is exactly what we are looking at. It is a choppy market and I don’t see a new trend emerging today. Q: What would your advice be to trades to stay off the Nifty and only concentrate on stocks? A: It is possible to trade the Nifty at extremes. What that means is that if we see a 40-50 point rally then perhaps a short selling trade could be taken for whatever you can get and if you see a 50 point decline then you can expect a bounce somewhere – a reversion to mean and take that trade. I am giving this because you asked the question for trading, but this is not a trade that everyone should take, only professional traders and they probably know it already. Q: For a positional trader though is there anything to suggest that the uptrend is over or will you still use every dip to buy into the market? A: The positional trader was long and our suggestion was that he should take profits at 5900. At this point, the trend is still up. However, it is not necessary to reenter if you have already taken profits, and enter only if you want to ride the trend now. It is not necessary to do that today; we really want deep corrections or reasonable corrections for positional traders to build new positions. So, a 50 point correction as we have seen in the Nifty is not enough. Q: What is your view on ITC today? A: ITC is fairly bullish; it is seeing a low and that low could stay for a long period of time. It is just building up a pattern that suggests higher levels are coming so individually I would be upbeat on ITC and that is on my buy list today. Q: What about Jindal Steel and Power Limited (JSPL), you have a buy on that as well? A: That is a very interesting chart. After being bearish on this stock for many months, altogether we find that this stock has bottomed out. It is giving us bullish patterns, a bullish head and shoulder is ready for a breakout. It is not a day trading idea because JSPL does not lend itself to sharp moves; the volatility has come down here. However for somebody who wants to take a positional view or even for a few days, it is a trade worth taking on the long side. _PAGEBREAK_ Q: You have a sell on Tata Chemicals? A: We had a sell earlier also on Tata Chemicals and that actually worked out. It is a very disappointing chart. It is in a bear market of its own. If you compare it with what the Nifty is doing then it has done the exact opposite - the Nifty has rallied from 5100 to 5900 and Tata Chemicals has fallen from Rs 295 to 220. For three days it had a small rally, that was essentially a bear flag and it has broken down from that. It is looking at much lower levels. I really can’t say why that is happening because that is for you to decide what the fundamentals are but technically it is a very weak stock. You want to take a short trade here and yesterday's decline could see significant follow through. Q: You have a sell on Exide Industries for the day as well? A: I have been upbeat on Exide but it is in a trading range. It goes to Rs 135 and comes back to Rs 120. It now went to Rs 135 and yesterday it retreated back. That retreat could easily take it back to Rs 115-120 again. So, there is a short sell here. It is a quick trade. It is essentially a day trade. Assume that yesterday's decline will continue and take you back to the support levels. It is not a positional trade but it is worth taking. Q: Can you elaborate your strategy on Zee Entertainment as well? A: Zee has been a disappointment in the sense that we rode the trend all the way from Rs 140 to Rs 250. Now it has been choppy and that choppiness was actually distribution. It is falling in a market where the Nifty has rallied. There was a small rally almost mimicking the rally that I explained in Tata Chemicals and that rally was a bear flag. Zee has dropped down, it is falling down from that bear flag and not up. Much more downside is there for Zee. For a positional trader - you just take a short position and stick to it. That flag tells us there are significant lower levels coming. For a short-term trader you take the short trade and exit with whatever you get. Q: You have a buy on Glenmark Pharma? A: Glenmark Pharma had a deep correction, went into a trading range. Pharma stocks do their own thing; they don't care about what the Nifty is doing. So this trading range is now giving us the sense of a double bottom and on the verge of breaking out. Yesterday, it did good things in the charts so we are buying at a breakout point, if we are right then a strong rally is in the offing, not only a day trade but also justifies a positional trade.