Remain mildly bullish on Nifty despite volatility: 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: What kind of markers are you setting on either side of the index because it has gotten quite volatile? A: It has got volatile as well as still range bound so my markers are clear. At 6,030 the first sign of a crack will appear and 6,000 is the level below which we will consider actively shorting. That has not happened yet. This is a trade we will be willing to take. On the other hand, after all said and done the Nifty is still in a trading range and hugging the upper end of that range. It is at 6,060. It is not a bad place to be. Also Read: Global mkts in good shape; Nifty slips back in trading zone So, the bias still remains bullish in spite of yesterday’s volatility. This kind of volatility will occur, not because of Reserve Bank of India (RBI) but because of variety of news. Now we are completely joined with international markets. We have to accept it. We have to see what is the sum total of the trend. The trend is still up. So, the bias still remains mildly bullish. Q: Bata India is in your sell list? A: Bata was an old favourite when it was going up and after it reached Rs 1,000 there was a sense that distributing has come. Short selling is never easy to do. Bata’s chart suggests that there are five-six-seven days of multiple declines and then they are intercepted by one day of a big rally and then the decline starts. That is how short selling takes place, manage risk but money is there. There was a big rally in Bata and it was fair to thing this is it, the end has come and after that rally three days ago the stock has started falling again. There is much more downside here. So, Bata is a short sell. Q: The chart of Godrej Industries has weakened? A: Yes, the chart has weakened now. Godrej was a buy but once it started sliding from Rs 325, the highs that it made, there was a sense that it has made a double top and it is now coming down. This is a correction. Just as Bata is a correction. The problem is that Bata’s rally from Rs 150 to Rs 1,000 can give a correction that will feel like a bear market. The same could happen with Godrej Industries, a correction or a deep correction. We are going to go short in it. There is more money on the downside, it has broken down from a trading range, pattern targets are lower and it is a good trade to be in. Disclosure: I have no holdings in the stocks discussed. _PAGEBREAK_ Q: Shriram Transport Finance Corporation is a buy? A: The theme is that yesterday’s price action has not disturbed the bullish nature of most non banking financial companies (NBFCs) and on the charts NBFCs are performing better than the banks. Shriram Transport was in a trading range, saw a big rally. That rally came down to support. Now Rs 720 level has been broken, which tells that the rally is probably likely to continue. This is to be combined with the theme that NBFCs are doing well on the charts. I think it is worth buying. This is also a positional trade. Q: LIC Housing Finance is a long trade today? A: Yes, it is a nice chart. A big rally to Rs 305, a correction and that correction stopped at Rs 275-270, small trading range and a breakout. This breakout could lead to Rs 305, which is the earlier high and maybe higher also. Q: You have picked ICICI Bank today? A: I think ICICI Bank will do what Axis Bank did yesterday. It is a matter of time. We want to be long in it. It is a 20 day trading range in ICICI. It is at the top of that range. Yesterday it crossed and one knows that banks eventually fell. So, it retreated. If that breakout comes then it will give very big momentum to ICICI Bank. It is worth buying. Trade in February Call, take position. If this market is going up then ICICI will be an outperformer. Q: The down drift will continue in Jain Irrigation Systems? A: Yes. We have had a sell on it few days ago. This selling is relentless. It is now broken down from the support so perhaps a base building exercise is going on but it is no longer easy to be bullish on the stock. It is very choppy. One should take the trade on both sides. The chances are that Jain Irrigation’s dip could easily come back to Rs 62-63, which is where rally started from.  Q: A word on the index and how you would approach trade? A: Markets are opening flat and that is okay. I would approach trade with a mild bullish bias. We are at the upper end of the trading range so we go long whenever opportunity comes back. Q: How does the picture looks technically on Adani Ports and Special Economic Zone? A: The picture looks attractive. The two big days that Adani Ports has done on the upside, big range days suggests that the trend has changed, a mild correction is over and the first level of Rs 146-147, which is where it is now is likely to be crossed. Once that is done there is no resistance and a big thrust towards Rs 156-160 is possible. _PAGEBREAK_ Q: Any cracks opening up in strong stocks like Yes Bank? A: No. Yes Bank yesterday was a bit of a choppy movement but so far as I understand the charts are still upbeat. It has been a big surprise. I think this is going to end with a bubble, not with distribution. So, the trend in the stock is up. There is more risk but there is sufficient reward for buyers even now.   Q: How would you approach trade on Reliance Communications? A: That has some disappointing chart patterns. Potentially bearish pattern is now visible, not confirmed but I would be a seller here because it does appear to be underperforming the other two peers and the bearish pattern suggests that things may not be as good as we imagine. It is a short sell. Q: Your views on Hindalco Industries? A: Hindalco is also a short sell. It is something that one needs to watch before selling. In case of Reliance Communications it is easier but Hindalco had a two-three day rally. That could be a bear flag, which suggests that much more downside is possible. The moment one sense a weakness, it becomes a short. Q: Would you buy this weakness in Indiabulls Real Estate or has the chart weakened? A: I would buy it. The charts are no longer what they were earlier whether it is for Indiabulls Real Estate or for HDIL. For Indiabulls Real Estate the decline similar to HDIL did not come, there is a sense of doing nothing but the stock is still a buy. The trend has not changed. Q: Your thoughts on NHPC? A: It has been a dream. It has moved up from Rs 19 to Rs 26 giving almost 40 percent return and at Rs 26 it is not yet giving message of being overbought. The sense is that it can go to Rs 28 or even higher. So, at current levels it is at new highs for this uptrend. It is still a buying opportunity. Q: Have you been tracking the charts of crude, it is not a huge rise but it been putting on about a dollar a week? A: Yes, it is. Crude was in a mild correction and crude corrections are probably time consuming. It is the most widely tracked commodity. That seems to be getting over. I have been upbeat on crude and my sense is that sooner or later Brent should touch USD 130 per bbl and that is anybody’s guess. Time is not easy to predict but prices are easier to see. Q: Bank Nifty made a thrust on the way up but then did not stick there and closed in the red, any sense you have of how one can trade this? A: It should be a long position. Yesterday, after the failed thrust the Bank Nifty was at 12,700. That is almost at the top of the trading range just like the Nifty, in fact even closer to resistance. So, if one have opening early morning strength then go long in the Bank Nifty or avoid it. I do not think shorts sellers will make money, not now at least.