Trade short on Nifty today: Sudarshan Sukhani

Sudarshan Sukhani of s2analytics.com, in an interview to CNBC-TV18, presents his outlook on the market for Thursday. He advises trading in the Nifty on the short side.

Also read: Caution rules Asian markets as Washington drama drags on Below is the edited transcript of his interview to CNBC-TV18. Q: How would you trade the Nifty today? A: Intraday and short-term traders do not use the 200 day moving average (DMA) to decide on any trading strategies. During the day, the prices can move up and down five times and that is only to give a sense. Once prices are chopping around it, the 200 DMA needs to be set aside till it gives us a direction. For the day if somebody wants to trade -- this is Futures and Options (F&O) expiry. If somebody still wants to have a bias and trade, the bias is on the short side. We are breaking support levels one by one. Yesterday, the final support of 5,820 was challenged; somehow the market held on to it. I would be surprised if it holds on to 5,820 zones for much more time; maybe Thursday, maybe Friday. It is a different issue. We made a top; we are moving towards 5,500 slowly or fast are a different issue. So, the bias for the day should be on the short side. Q: You would sell HDFC Bank today? A: Yes. Banks are weakening, they are underperforming, the outperformance is over and done with and that was a bear market rally. Now we are looking at banks to go short in. I have explained that public sector undertaking (PSU) banks are far better; the downside performance will be much more, but all banks are short sell. Yesterday, HDFC Bank broke through a short-term support level, closed at its lows; chances are that today that will continue that will persist. A stock that closes at lows usually sees follow-through the next day. Q: You have picked CESC today? A: CESC is some kind of a dark horse. It is also little more speculative and by that I am assuming that large traders some times try to manage it. It doesn’t come in the radar because big institutions do not like it. However, for small traders it doesn’t matter, for individual traders one can buy and sell anything. CESC had a sharp decline. That decline still made higher low and that suggests that there is an underlying uptrend now developing in this stock. It had a rally and has now faced some kind of a resistance or rather a trading range. We will assume and that is a strong chance that that will breakout on the upside and because today is F&O expiry this could give us a handsome break on the upside, if it starts showing strength, latch on to it, by the afternoon lot of things could happen. Q: You have picked up Cipla from the pharmaceutical space? A: The ones that are going to go down the banks and I suspect the CNX IT, which is topping out and pharmaceutical remains one of my favourite picks. Pharmaceutical is likely to do its own thing no matter what the market does; not completely but to a large extent. Cipla had a nice rally. It is messy on the charts then there was a decline and that decline has found strong support at the Rs 415-420 level and chances are that the rally will resume. So, it’s a stock that is making lifetime new highs, finding support and chances are again going towards lifetime new highs. So, it’s something worth buying today. Q: You have a sell on Indian Oil Corporation? A: Yes. Surprisingly, they had bullish charts; had a decent rally. That has fizzled out. It is something like PSU banks; whatever bullish charts we had seen have gone away. IOC had a trading range and broke down yesterday which suggests that the entire rally was a bear market rally; eventually in this downside we will see lower levels-lower lows here. Therefore, a trade is here to take a short trade, not necessarily intraday but to build a position on the short side. Q: You said October maybe tricky and the market will head closer to 5,500 levels on the Nifty. What could the range look like? Is it still going to be an extremely rangy month, the series of October? A: I would expect the range to expand whether it expands in the early part of October or in the late part, is difficult to say. We could see narrow ranges in the first half and then see an expansion of that range. It is not easy to predict the time; it is always easier to predict the prices. I would expect prices to move lower. The upper resistance areas are some where between 6,000 and 6,100. It seems very unlikely as of now for the Nifty to cross that. _PAGEBREAK_ Q: Which should be the key constituent that would take it lower, where are the charts looking weak? A: Unfortunately everywhere, banking, oil and gas and this time the IT stocks. IT will come down, correct, doesn’t mean that the dollar will also come down; they are not going to be related this time. Q: How would you approach fast moving consumer goods (FMCG) and autos as you head into October? A: I would avoid FMCG. It is not a short sell. It is not a buying opportunity either. Chances are that we will see choppy moves there. There are two major stocks; ITC as well as Hindustan Unilever (HUL); short-term traders should buy HUL when there is an opportunity intraday or even a couple of days or swing trades. Autos are far better opportunity. Auto stocks are giving a sense that they are likely to outperform in the near future. So, it is difficult to make ranking, but I would put Maruti at the top and then Tata Motors and then Hero MotoCorp. Q: What is your strategy on Bharat Heavy Electricals (BHEL)? A: It is going towards Rs 180. Q: That would be profit taking time or you will make up your mind then? A: Anyone who buys at Rs 140-145 should take profits even before Rs 180; just because I said so it doesn’t mean it will reach there, but primarily it is going higher. Q: Tata Power will also keep rallying? A: Tata Power has an excellent bullish chart and sometimes it is difficult to correlate the individual outperformers with the weakness in the Nifty but these things can happen. Q: Is there any positivity in Jet Airways? A: Nothing. These moves are sometimes random moves, not tradable.