Market still in uptrend; go long: Sudarshan Sukhani

Global sluggishness took a toll on the Nifty. In a weak start to the week, Nifty closed at 5,988, losing half a percent in trade on Monday. The Sensex lost 92 points or 0.47 percent and ended at 19,691.

Technical analyst Sudarshan Sukhani, s2analytics.com sees this weakness as a minor correction or a dip, but beleives that the trend for the market is still up. "For me the trade is still to be on the long side. If the Nifty were to close below 5,980 today, the time we close trade, then short-term positions will be eliminated," he adds. Also read: Credit Suisse believes politics key for mkt, yr-end target at 5600 He further adds, at the time of closing trade if the Nifty closes below 5980, all short positions would be eliminated, but still would not go long. Below is the edited transcritpt of his interveiw on CNBC-TV18 Q: We were just talking about how the Nifty seems to be struggling again. In this short-term would you agree that's the way it's looking on the index? A: What we are seeing is a minor correction or a dip so I wouldn't say that the Nifty is struggling. After a breakout rally sometimes the markets come back and test the resistance levels. The point from where this breakout had occurred was 5920-5930. So each breakout has its own characteristics. It is not possible to say that we will see a repetition of the earlier ones when the Nifty literally flew 200 points in three or five days. That may not happen this time, the move can come in different forms but the trend is still up. So for me the trade is still to be on the long side. If the Nifty were to close below 5980 today that is by the time we close trade, then short-term positions will be eliminated. We still won't go short, our positional trades will remain. Sometimes, trading tactics are needed to manage short-term positions but the view is quite clear, we are in an uptrend, we had a breakout. These dips are part of the game, we can't avoid them. Q: Yesterday you were selling Kotak Mahindra Bank and today it's HDFC Bank, why? A: Yes, because I have been fairly downbeat on large private sector banks.  These are the ones that will drag the Nifty down and which is exactly what is happening. HDFC Bank has broken down from a trading range and it is drifting on the downside. In a choppy market, even in a mildly indifferent or mildly bullish market, I suspect HDFC Bank may see lower levels. This kind of short selling especially of heavyweight index stocks should be done only by professional traders but there is money on the downside still. Q: From the midcap basket you are bullish on Exide Industries today? A: Exide Industries has a very nice chart. There are two different patterns playing here. The first is a smaller bullish head and shoulder pattern that confirmed itself yesterday, so we should see follow-through. There is also a target for the pattern. Once we see follow-through for this one, then Exide had made a double bottom and on a larger timeframe that double bottom gets confirmed. We are seeing first of the bullish patterns, which if is working out will trigger the second larger bullish pattern. That’s a very nice position to be in. Exide should see follow-through for yesterday's gains. Positional traders have this excellent opportunity to build their positions at fairly lower levels. Q: Petronet LNG is also on your buy list, why? A: Yes, it has seen a very decent correction for itself from Rs 175 to Rs 154. It was trading in a small range at the lower end around the Rs 154 range for almost one and half months. It has broken out of that range yesterday. It is will also come out with results in a couple of days. It is always a difficult question whether we should be buying before the quarter results come or should we wait. Given the strong momentum in Petronet LNG earlier this breakout is to be taken as a buying opportunity and probably is discounting of results. So I would be a buyer here today. I expect a follow-through. Petronet LNG is not as much of a day trading stock as we would like. So ideally you want to carry positions here. Q: Are you selling Raymond today? A: Raymond seems to be topping out. A bearish descending triangle is almost on the verge of getting confirmed. That doesn’t mean that the stock itself has turned, it is still in a long-term uptrend. Within this long-term uptrend’s, we can see sharp corrections. We have seen similar corrections earlier in Century Textiles which is broadly in the same kind of business and that seems to be working out in Raymond. Since the trend is up and the thrust is on buying, we would like to select only those stocks where there is some momentum on the downside irrespective of what Nifty does, Raymond qualifies for that. Q: FMCG and pharmaceutical stocks are back in your list. What about Colgate? A: Colgate Palmolive (India) has been on my list since it crossed Rs 700. At Rs 700, I used to think it’s rallied so much do I have the courage to buy it but it is now Rs 1500. The same pattern, it rallies, then it consolidates, corrects and finally rallies again. We all know that at some point this rally will stop but we can't call the top. Colgate had a small correction, almost 100 points on the downside. Yesterday may be it closed better giving the sense that the correction is over with. This is a buy on dips opportunity and we keep on buying these dips unless proved wrong. We don’t know where this rally will end, where this uptrend will end finally. It is a wonderful stock to be in on the long side. Q: From pharma you have chosen Sun Pharma? A: Yes Sun Pharmaceutical Industries keeps pushing against that final resistance, beyond which it will go into lifetime new highs again. I would say it is just a matter of time. Yesterday, it did some very nice chart patterns, it closed better and it is again on the verge of a breakout. That breakout will come when it has to come but we want to be in position as many times as possible. Once this move into lifetime new highs come, there will be a sustained up move here. It is one of the best stocks in the universe. _PAGEBREAK_ Q: Any takeaways from pre-opening on what the trading stance should be this morning? A: The minor takeaway is that the market is opening flat and that is good news because if we were to actually begin a deeper correction or a correction of some kind, we should have opened lower. So to that extent the bullish stance is maintained and hopefully confirmed. Q: We saw an uptick in metal stocks yesterday. Steel Authority of India (SAIL) did the best. How is that chart looking? A: It is looking very nice. We tracked SAIL when it was at Rs 80. It was just coming out of a basing pattern and since then it has been in our buy list repeatedly. SAIL is now giving a target of Rs 102-105 and the up move is intact. We should not call a top in metals as of now, even though the stocks are just going up relentlessly, let them. Q: What is the chart of Reliance Communications telling you that has also crept up quite a bit? A: Yes, it went up from Rs 52 to Rs 80. It is not the end of this up move; the up move is being sustained. We don’t have any signs of overbought condition, which in a bull market is a good sign, which in turn means that it is not even prepared to go through a minor correction. Reliance Communications is an intraday trading opportunity. It is not just for position traders, this stock is giving lot of opportunities intraday as well. One must have a view and that view is be on the long side. Any dip or correction should be taken as a trade. Q: How about Shree Renuka Sugars technically? A: It is very puzzling chart. It is actually a toss between should you sell this strength or should you buy this? May be we should buy it because it is giving the sense that it is basing out and then we have an up trending market broadly. Shree Renuka Sugars is hardly a stock that we want to go and buy now. Let it breakout above Rs 34-35 levels that would be much better buying in strength. As of now it is a buy but it is best to watch it and see if it has enough momentum to take it upward. Q: How about something like Adani Power? A: That is something we want to buy into. Power has been doing well and it is a minor sector but we have been tracking it and saying we should be long in it; not only, Adani Power but Tata Power also. Adani Power is a good buying opportunity and something that intraday traders could consider. Don’t worry about the small price range; ideally you want to trade in stocks that have larger value because the movements are larger. Adani is a volatile stock, so it is worth taking a position in it and worth taking intraday swing trades. An immediate target for Adani Power could be Rs 69-70.
Q: We were discussing Larsen and Toubro (L&T) earlier and whether it is beginning to look a little shaky. Is it too premature to say that or are you worried? A: It is an index heavyweight so if the index were to go up, Larsen and Toubro would become choppy. To that extent it is certainly shaky and I would not venture into a short position here. Ideally and theoretically, the chart is a sell but given the context in which we are operating as of now, it is not a good idea to sell L&T. Even one day of a big up move can literally kill the bears and that could happen any day. So yes it’s a sell but ideally we want to avoid it. Q: What about Hindustan Oil Exploration Company (HOEC)? A: There is nothing in HOEC, the chart shows some kind of a buying opportunity but I would avoid it. It is choppy, it is all over the place, and it goes up, comes down. It is a midcap and we want to go to midcaps that have shown us sustained up moves but HOEC hasn’t done that, so it is best avoided. Q: Any suggestion that the Bank Nifty is beginning to flag? A: No not really. It is just doing what the Nifty is doing. There was a minor correction yesterday.  I thought the Bank Nifty would underperform and the CNX IT would do much better. While the IT index is doing better, the Bank index hasn’t underperformed. There is no weakness in the Bank Nifty as such. Disclosure: I have no personal holding in the stocks discussed.