Mkt to be choppy; avoid trading Nifty today: Sukhani

In an interview to CNBC-TV18, Sudarshan Sukhani of s2analytics.com shared outlook and reading on the market.

Also read: Larry Summers the next big risk for emerging markets? Below is the edited transcript of his interview to CNBC-TV18. Q: How would you approach the Nifty today? A: Monday’s breakout on the upside completely failed yesterday. To that extent, the bullish scenario is no longer available. It can come back again and markets can do anything but as of now that scenario is on the back burner. The Nifty has come back into a trading range. The trading range was evident for many days; 5250-5500. It has retreated back in that range. Inside this trading range, essentially there is no trade in the Nifty for two reasons. One, trading ranges are difficult to predict and very difficult to trade inside. Second, the extraordinary volatility that we saw yesterday is not tradable. The best trade for the Nifty is to keep quiet. Either the Nifty will take out 5250 or give us an indication it is doing so. And then a short trade would be very much justified or the Nifty will chop around. On a day-to-day basis, the markets will change. So today there is no trade in the Nifty. The trades are elsewhere in individual stocks. Q: Why is there no short trade not on an intraday basis, but for a slightly longer period now? A: Because the short signals haven't come. There was a trading range and we simply came back into that range. So that return to the range does not guarantee that a decline will begin. Q: You have a buy call on Lupin. That was in fact one of the few stocks that bucked the trend on Wednesday. A: Yes it was. Lupin has gone through a correction and has been correcting for quite a while now. But it is a strong stock to be in. One has to be a buyer in it today. Why today? First it made a small trading range; broke out of it while the market was chopping around and then it is now on the verge of another breakout from a larger trading range. There was a correction, which is over. Bullish consolidation patterns are being made and then the stock is breaking on the upside. All said and done in a choppy market, there are opportunities to go long and Lupin is one of them. Q: You have a buy call on Tech Mahindra? A: Tech Mahindra has been an outperformer. We caught it when it was Rs 920-930 and it has been going on relentlessly. At some point, even we start feeling embarrassed how long it can go. But for the last five-seven days it is in a trading range. It did not participate in the Nifty’s decline and none of the other IT stocks did. This trading range is not going to last so there is an imminent breakout. We don't trade Tech Mahindra if it breaks down from the range. We simply step aside. We don't short IT stocks. However if it goes up and we could, the range itself is telling us that another move is coming on the trending side then there is more upside here. It is a very interesting stock to watch. You see the slightest signs of trends; go long in it for intraday play. For those who want to carry, you are welcome to carry the positions. Q: On Tuesday, the deepest cracks came in financials. You choose to sell into IDFC today? A: Yes it is a very bearish chart. IDFCs relentless decline, four days of consolidation and then a sign that the consolidation is giving way. Sometimes I wonder what is going on in IDFC. On the charts it is not good. This is an imminent breakdown and it is a flag like formation telling us much lower levels are coming, we have to follow that. Q: You prefer to buy the Tata Motors DVR rather than Tata Motors itself? A: Yes. That is for two reasons. One; the DVR is slightly more volatile than the stock. It is only marginal because it is a derivate of that, but it is a little more volatile for us to get more money out of the investments or the trades that we do, little more in percentage terms. Second; the DVR at this point is lower priced. The charts, patterns are more visible and clear on DVR as compared to the equity. Sometimes equity swings. Yesterday’s volatility caused Tata Motors also to swing wildly, while the DVR was relatively stable. Tata Motors is in an uptrend that is surprising given the state of affairs in the market. We want to capture anything that is in an uptrend. It is a blue-chip stock at least the risk of going to zero is not there. It is a very nice stock to go and buy. The slightest signs of an up move I think Tata Motors will pick up. _PAGEBREAK_ Q.You have a sell on Grasim Industries for the day? A: Yes. Cement has been a ‘sell’ for some time now. Also ACC, Ambuja Cements, even Ultratech repeatedly has come in our list on the short side. Grasim had a small rally. It was a bear market rally that tells us much lower levels are coming almost similar to IDFC. It has fallen so much, but we know that stocks can keep on falling. So in a choppy market, there will be lot of stocks which will fall not necessarily to influence the index, but certainly cause pain and anguish and Grasim is likely to be one of them. Q: Some of the real estate stocks may be under pressure purely because of sentiment on what has come out. Is there a shorting opportunity there in either names like DLF or even anything in the broader markets? A: Shorting opportunity or for that matter going long are not preferred trades for today. Today is probably a much better day to watch the markets and see whether volatility continues or it settles down. There are opportunities, but not in DLF as it has been in a narrow trading range. It has not come out of it despite yesterday’s decline. So it would be a very big risk. Q: What about Reliance Industries? That one saw a fairly sharp cut yesterday; not intraday, but is there a trade for the contract? A: The trade is actually to go long in Reliance if the market stabilizes, not go short. We have seen a very handsome rally in Reliance and yesterday’s decline could simply be a correction. Normally a correction is spaced out in three-four days and this one could be compressed in a day; markets can do what they want. So there is no shorting opportunity even in Reliance. Q: Any thoughts on Power Grid that has been under pressure in the last couple of days? A: Power Grid is a buying opportunity. When the Nifty was at 5,950, we were fairly bearish giving all kinds of sell calls and there was a running battle that why should we be selling when the markets are so cheerful. At 5,300, the selling opportunities have diminished. They will again start once the market consolidates and breaks down if it does. But as of now Power Grid is also a buy, it is a correction and a dip. Q: For the medium term, is this market still headed towards that 4800-4900 level that you were talking to us about last week? A: We were looking at 4,800-4,900. Then the markets had that sharp bounce from 5,100 intraday 200 points rally. It then consolidated and actually went up. We could all go wrong so with a caveat. Markets are not willing to go lower. Q: How will you approach ITC? It actually saw a delivery based selling yesterday? A: Yes we just wait for it, it is not a short sell. ITC has fallen from Rs 380 to Rs 300. A lot of cream in the shorting has already gone away; the short sells were available when we were at 5,950. We talked about it relentlessly. People must understand that either market will start another leg of the downtrend and they could easily do it then they are consolidating. They will breakdown and there will be abundance of shorting opportunities, but not in ITC today, neither in Reliance. _PAGEBREAK_ Q: What is your strategy on Titan Industries? A: Titan is a short sell. It is going much lower. So, it is not as if there are no trades. For example in Titan, I would be very safe and comfortable to build a short position in the current levels. It is not intraday but for the September series it is worthwhile. Q: What about Bharat Heavy Electricals (BHEL)? hat clearly showed some bottoming out trends? A: Yes and that is the good news that you are looking for. Yesterday BHEL was our buy in the morning and BHEL is bottoming out, it is also giving us clear signs of a bullish pattern. Everything fell yesterday so just ignore, that could be a correction. I would be a willing buyer in BHEL. Q: What about the rupee? It is virtually at that 68.80/USD level at all time low, how are you charting that one out? A: I think now the rupee is topping out which means 68.80-69.50/USD wherever it finds the final top, like most of the stocks which are not giving shorting opportunities. The dollar is not giving us going long opportunities. This is a profit taking opportunity now for people who should be long in the dollar. Q: What about the telecom stocks? Would you have a strategy in these for the contract? A: Idea Cellular is a buying opportunity and I am very comfortable with stocks that are going up and go through a correction. Idea would be my preferred choice in the telecom sector. Bharti Airtel is something we will simply avoid and Reliance Communications is no longer in that high flying category. It is to be completely avoided. Q: Is Jet Airways showing signs of putting a bottom at all? A: Absolutely not. It is more for entertainment, but I wouldn’t advice anyone to go and buy it, not at all. Q: Would you go with any of those metal stocks as well, Nalco or one of those? A: Yes I would go with Sesa Goa, Steel Authority of India (SAIL) and JSW Steel. They are all steel stocks, but they should be doing well on the long side.