Nifty to give away 5850 in next few sessions: Sukhani

It was flat week for the market. Although it was not a bad week, it was a sticky week and the market was down half a percent for the week.

First signs of a bear trend have become evident for the market said, technical analyst Sudarshan Sukhani, s2analytics.com. "The downtrend became evident when the market opened high and closed at the lows of the day, for three successive days," he said in an interview to CNBC-TV18. He further added, 5850 level on the will give way in the next few sessions and 5,800 would then become the logical support. Another factor that could affect the market is the dollar. With the dollar strengthening, there would be significant pressure on the rupee. The rupee could touch levels of 57/USD, said Sukhani. Also read: Tulsian says, Jet-Etihad deal in Dec; USL at Rs 1900-2080 He recommended short selling Hindustan Unilever,Titan Industries,ITC and buying HCL Technologies in the coming week Below is the edited transcript of his interveiw on CNBC-TV18 Q: It was a flat kind of week for the market, technically what is the prognosis for next week? A: It was flat but there are lot of signs that we are now moving into a downtrend, so that extent the first signs of a bear trend has become evident. We broke down from a trading range which was there for probably two weeks that was 5,880. Then for three successive days the market would open higher and slide down throughout the day although that did not happen on Friday. These are signs of a downtrend, when you open high and closed at the lows of the day. I would say that the undertone has become bearish and we should be looking at lower levels, moving towards 5,700. Although it is a pity but markets have to correct. We must keep it in perspective that from 4500 we have rallied to 5965, so a deep correction of a similar kind could be coming in. The takeaway has been significant for me and there is something else which we sometimes ignore or forget to discuss and that is the bull market that is again emerging in the US dollar. The rupee is likely to come under significant pressure and touch 57 again. So, considering all this I am little bearish Q: What kind of boundaries would you expect to see in the Nifty over the next five trading sessions both on the lower side and higher side? How would you be approaching trade in terms of keeping stop losses on the preferred trade? A: The boundaries for the higher side are clear; it is 5,965 give or take a few points. That is the highest that the Nifty made and was unable to cross subsequently, so that is the level of resistance. On the lower side, I would assume that during the next five sessions, 5,850 will give way on some day or the other and 5,800 would then come as a logical round figure as support. So we are looking at 5,800 on the lower side and I am giving 5,965 as a resistance number but I don’t really expect the Nifty to go to that zone. Q: The week was also characterised by weakness in many of the consumer names, Titan Industries, ITC, Hindustan Unilever, would you carry that into next week in terms of selling any of them? A: Yes, I would. In fact all three are likely to be weak but the weakest of them as we enter into next week in HUL. It has confirmed a very bearish pattern that suggest intermediate top is in place and lower levels are likely. That is not unusual, every bull market and every uptrending stock will go through deep corrections. HUL has already corrected 10 percent and giving suggestion that another 15 percent downside is likely. So for next week, HUL would be my first and ideal short selling candidate although even Titan and ITC would be short sells. Q: What about IT that has had a week trot, are you getting the sense that names like HCL Technologies might be ending their correction? A: It does appear so. Now if the Nifty were to go down, maybe this end of correction would become choppy. HCL Tech in any case is the out performer among the four IT stocks and next week there should be an opportunity to go long in it. At current levels it is standing at strong support and the slightest sign of upbeat and momentum in the broad market should see it give 5-7 percent gains, so that is a buying opportunity. Q: From the midcap basket you have picked something like LIC Housing Finance for next week? A: It is a buying opportunity. It has been in a trading range, It is now willing to move higher, Friday was a good day for it and I would assume that in a choppy market some stocks do go up and LIC Housing is ideally positioned to do that. Non Banking Finance Companies (NBFCs) in general should be bought on dips; the whole sector seems to be on a roll. So LIC Housing is a buying opportunity but again the context must be seen; if the Nifty starts coming down buying in general should be avoided. But in any circumstance some buying would be done and LIC is an ideal condition for that