Mkt to remain choppy with downside bias: Sudarshan Sukhani

The Indian market was very choppy in the last week. In an interview to CNBC-TV18, Sudarshan Sukhani of s2analytics.com says he would be a seller in the market today because the Nifty failed to cross the resistance level of 5,960-5,965 and also broke down below 5,880. "The intraday short-term signals suggest selling," he adds.

However, he cautions traders that selling at the top of the rally is a risky trade. Also read: Raghuram Rajan says economy likely to grow by 5.5-6% in 2012-13 Below is the edited transcript of his intervieew on CNBC-TV18: Q: How would you approach trade today? A: I would approach trade by being a seller and that’s exactly what we did on Friday and that view remains. The Nifty has gone up, and failed to cross significant resistance levels, 5,960-5,965, which was an earlier high. It also broke down from 5,880 supports. We are seeing a market that is choppy, but with a push on the downside. Traders must understand that it is a risky trade because we are trying to sell almost at the top of this rally. Since the intraday signals, short-term signals suggest selling, we are going with that kind of momentum. If we are wrong, we are 50 points wrong and we will be out of the market, otherwise there is a deep correction in the offing. Q: You are bearish on Titan Industries today? A: Titan has seen a handsome rally and it rallied from Rs 230 to more than Rs 300. It was in a trading range for the last three weeks and it’s broken down decisively from that range. It is not just Titan; we can see this happening in Hindustan Unilever too. I think the story of consumer durables, fast moving consumer goods (FMCG) is now getting complete and they are going into a cycle that’s not to the liking of bulls. Titan is probably going to go through a deep correction now. Q: You are selling the blue chip HDFC Bank today? A: Yes, but that requires a lot of courage because HDFC Bank and HDFC have been very big contributors to the Nifty rally. Given my sense that this market is probably topping out, HDFC Bank is going to be the first of the blue chips in the banking sector to see a big correction. For the last three weeks it has been in a very narrow range and from that point it has not been contributing to the Nifty and it’s on the verge of a breakdown from the narrow range. The upside in HDFC Bank is limited even if doesn’t fall. So people who are looking to sell Options could make money even if HDFC Bank remains where it is. There is a short trade for short-term traders and for somebody who is trading in Options, sell Calls by itself will make money. Q: Dish TV India is in your buy list today? A: Yes, it has come back after some time. Dish TV has been a favourite. It has done a bit of what it should have done but has not exactly become a roaring success. After a brief correction, there is some sign that perhaps the correction is over. If that is so, then eventually, it should cross and make new highs for this uptrend. It is a stock that could easily go against the broad market. So I think there is a buying opportunity here. We will have to see whether it works out or not. The market this time is not giving many stock ideas; Dish TV is probably one of the better ones in the very poor lot. Q: How about Pantaloon Retail? A: Pantaloon has not fallen, which is surprising. But there is a trade here on the long side because we must respect the wishes of the market. The market is saying perhaps it has found support, its now willing to go higher. If it goes higher, Pantaloon has a propensity to rush in one direction, it could easily be up. After the market opening, wait for 15-20 minutes of cooling off, if the stock starts rising, then go long then itself. Q: Cairn India is also a sell in your list? A: Cairn is in a downtrend. It has made a bearish head and shoulder pattern; it broke down from Rs 325. A small one day rally has brought it to Rs 323 which is where a rally will bring prices to resistance levels and that resistance should hold. If this pattern is to work out then Cairn is going below Rs 300. Today, one should expect that rally to reverse and resume its downtrend and probably continue further. _PAGEBREAK_ Q: LIC Housing Finance is also in your buy list? A: It’s on the verge of making new highs for this uptrend. It made a small consolidation and has broken out of it. So a stock that went up, consolidated and broke out, tell us there is more upside. The stock will do very well in a choppy market. In a market that takes a downward direction, a lot of these stocks will falter but we cannot predict that now. So traders should be aware that if the Nifty stays choppy or even starts rising, then LIC Housing is probably a better stock for day traders today. Q: A word on the Nifty, does the pre-opening indicate a soft start today? A: I am bearish and short in the Nifty. In fact I am long in the US dollar. I had explained on Friday that the dollar is now beginning a breakout from a base, and if that is so, then it’s giving a target of 57. A rising dollar and a falling Nifty, is a lethal combination and not a time to be overtly bullish. Q: Your views on Nagarjuna Construction Company (NCC) from the infrastructure space? A: The stock is a buy. All the stocks that are buying opportunities must be taken in context that the buying will be worthwhile only if the broad market doesn’t go down. In that context it has done very well, it went up from Rs 30, rallied to Rs 50, it is now again on a new uptrend. Whether it’s a buy today or not is a different issue but in the intermediate term it should be bought on a significant dip. Q: Would you look at Allahabad Bank or do you think the overall market might drag down bank stocks? A: The trend is up for banks but the overall market is likely to drag the banks down. So, while the signs are not yet seen on many of the PSU banks, the Bank index itself suggests that Friday’s rally was just one-off. We will find that out today, if there is follow-through or not. To that extent, it’s wise to avoid PSU banks for the time being although the trend is up but we do not have to take these trades. Q: There has been some weakness on the charts of Pipavav Defence and Offshore Engineering Company, how would you trade that? A: I would buy. That weakness was just for one day, so it’s irrelevant. Pipavav Defence has rallied; it almost doubled itself from Rs 50 to Rs 90. It is not a buy today, because it’s been on a roll. Suppose it corrects today, then tomorrow it becomes a buying opportunity. Stocks that have given such strong signs, do not retreat. So even in a weak Nifty it would be an opportunity to go long in Pipavav. Q: How about Aurobindo Pharma? A: It has been correcting for three-four days now and at some point of time it will stop correcting, so we must go long in it. The fact is that we cannot go short in these stocks, which we have discussed, they are long only stocks and the same applies to Aurobindo. Q: How would you approach Jindal Steel & Power (JSP)? A: Jindal Steel and Power Limited is a buy if we see a follow-through of Friday’s rally and that applies to Hindalco also. If there is a significant follow-through, which means if it starts going up after the first 15-20 minutes then there is an opportunity for an intraday trader to go long because the market could easily be choppy for most of the day. It is a buy as an intraday trade. Disclosure: I have no holdings in the stocks discussed.