Wait for rally to short intraday trade: Sukhani

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

Below is the verbatim transcript of an interview aired on CNBC-TV18. Q: Assuming we get a bit of a pullback how would you trade it on the Nifty? A: I would wait for a smarter rally and then go short only for an intraday trade. We are still in that trading range and there is no confirmation that this market is breaking down. Two points lower than 6,000 is not enough so either the market will indicate that today we are going to see follow-through, we are going to see confirmation of a decisive breakdown then positions should be carried forward. Otherwise the trade is to go short but only on a small intraday rally and it would be a pure intraday trade. So, the message is that the Nifty is inside this trading range, there are no carry over positions available. We do not actually make a commitment on the trend because there is no trend. Also Read: Global markets strong; Nifty struggling to stay above 6k Q: Topping your list of sells this morning is Hindustan Unilever (HUL)? A: Yes, HUL’s decline is not yet over. It started that at Rs 570 then after a trading range on the back of poor results or whatever the market perception is, the decline continues and that is going to continue for some time. The first signs of a base breakout have not been visible, after three days of rallies HUL weakened considerably on Friday and the chances are that one will see a follow-through. So, this is a trade where traders could actually buy HUL Puts or sell Calls or even take a simple short selling trade. The key here is and that applies to most short selling ideas that do not sell immediately on market open, traders must wait for an opportunity that is a different issue but HUL continues to be a sell. Q: You are selling Jaiprakash Associates today? A: JP Associates has made new lows for this downtrend. It made a low at Rs 86 and then cracked it on Friday. It is amazing. It was doing well on the chart and then it started cracking support levels, Rs 100-93 and now Rs 83. It is a very disappointing price performance maybe it is going to build a base again at some point of time but as of now the follow-through is on the downside. Lower levels are expected and likely and there should be no falling knife catching, do not try to buy it. The trade remains a short.    Disclosure: I have no holdings in the stocks discussed. _PAGEBREAK_ Q: You are beginning to buy the real estate stocks again like Indiabulls Real Estate? A: Yes. I think there is a lot of sector rotation going on as infrastructure gets pummeled again. Real estate is doing all the right things on the charts. The long-term charts are turning bullish. It is not easy to say whether that will see follow-through on a longer term but the trade is to buy real estate stocks whenever we get an opportunity. HDIL goes out of our list for many reasons but Indiabulls Real Estate remains. As there is a buying opportunity the big gains recorded on Friday were not sustained mainly because the market fell down but it still closed with gains. There should be follow-through. The trade is not to go long immediately on the open. If the market give a sense of stability even choppiness, real estate and Indiabulls is a buy. Q: You are Maruti Suzuki today? A: Maruti is a buy at every trading level whether one is an intraday trader, a position trader or a swing trader. There was a mild dip and then a rally. That rally should see a follow-through. I would not be surprised if in this follow-through, not necessarily today, in the next few days Maruti makes lifetime new highs. It is a stock we want to buy whenever we can. Today is a good day to go long in it. Some gains on Friday should see another big gain day today.  Q: Tata Steel is poised exactly at Rs 400. You see it going substantially below Rs 400 again? A: Yes and that is a pity. Tata Steel’s Rs 400 level is not likely to hold. The chances of a rally from Rs 400 upwards seem to be fairly bleak, at the most intraday, at the most for few hours. The trade here is to go short again. If Rs 400 seems to be cracking and the reason why this bearishness comes about is also because most metal stocks are showing similar patterns, after big declines they suggest that the decline is not yet over. The same thing is for Tata Steel. It is difficult to say what the final targets on the downside will be, of course, we are discussing intraday targets - but it is a very dismal performance for the entire metal sector.    Q: You are buying Dr Reddy's Laboratories today? A: Yes, Dr Reddy's was in a small range. It is now inching upwards. Once it does that, once it gets little more follow-throughs, a little more push on the upside, it starts making lifetime new highs. These lifetime new highs is what we want to buy or even anticipated lifetime new highs are worth going when the stock is as strong as Dr Reddy's. It is a short-term trade because pharmaceutical is looking tired like the Nifty but for short-term traders there is money on the upside. This is something that one can buy in the morning if one sees strength. Q: What would you do if you get a start like this, in 20-30 points would you start booking profits on the index? A: If it starts more than 25 then the trade is that there is no trade. One has to wait patiently for another 20 points and then perhaps look to take short positions. These will also be intraday trade. So, the Nifty is available only for intraday trading, there is no direction clear and that by itself is a big message. _PAGEBREAK_ Q: What did you make of the drop in Bharti Airtel on Friday? A: Stocks go up and then they come down and that is the easiest explanation I can give. I suspect Bharti was overextended and that was a good reason. It had already started correcting even before Friday. So, Friday accentuated that correction and that maybe over now. So, at Rs 330-328 Bharti is an excellent buying opportunity. Good stocks correct. It has done that and now a new rally should start and I would be a buyer in the stock, expect Rs 340 if it starts an upmove.   Q: Your views on Suzlon Energy? A: Suzlon is coming out of a long bear market. That process takes time. It is not necessary that it will keep on rolling. The view is now positive, charts are cheerful and they are suggesting buying opportunities. What happens after 25 percent rally? One cannot buy it immediately. However, Suzlon remains a buy. So, traders need to find a good trade location, intraday or for a swing trade, wait for a correction or a consolidation and then buy it. Q: What about IRB Infrastructure Developers. It is one of the infrastructure stocks, which did not participate in the pullback that the sector saw on Friday? A: Yes, it did not participate, it fell. IRB suggests that it is now willing to crack Rs 115-120 level and go towards Rs 100 eventually. A short-term day trading target will be a little more modest but the stock is very disappointing. It is a short sell. Q: You foresee more weakness for Ambuja Cements as well? A: For a short-term trader Ambuja’s weakness on Friday could see lower levels. However, I foresee cement now bottoming out. This is only a short-term suggestion, which means for today, tomorrow perhaps there is some weakness because Friday’s declines mean something. I would not consider short selling it for a longer period of time. Q: What would you do with Yes Bank now? A: We have to buy it. It is amazing how the two private sector banks have beaten all forecasts. I am assuming it is making a bubble and that bubble could go much higher. There is a trade here and even after the market opens, wait for 15-20 minutes, buy Yes Bank, expect a target of Rs 550. This is a stock that is in an upmove and traders should participate. There is probably more upside here. Q: Your thoughts on Tata Motors? A: Tata Motors would be a buy because it is more than Rs 300. It is not as if it is in deep trouble. We have seen some corrections, some declines, they become inevitable at certain higher levels but that is about all. The trend is up and I would be a buyer after that big dip. So, maybe this correction is an entry opportunity.