Traders take short position when Nifty rallies: Sukhani

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

Bernanke's statement to provide some relief to mkt: IIFL Below is the verbatim transcript of Sukhani's interview with CNBC-TV18. Q: Your views on the index and how would you approach trade today? A: The index is now locked in a narrow range and that range is well defined; 5,900 and roughly 6,050 on the upper end, the resistance lines. However, within a trading range, indices or stocks, does not matter which, are difficult to trade. So, we are in a difficult environment. Surprising is, just a few days ago we were in a trading range and we had gone back to that range fast, which suggests that upside momentum was not enough to keep the market afloat. If that is so then intraday traders should be willing to take short as well as long positions. The key here is to see market extended, over extended on a intraday basis, it is not easy to define but traders should be able to sense it and take a short position when market rally a bit and long positions when they subside or come back. The bigger trade will come when this trading range breaks out. I think it will breakout, it is a matter of time when and that will give us a much better trade. Q: Bank of India (BOI) is in your sell list today. A: Bank of India has a horrible chart and that is not saying much because most public sector undertaking (PSU) banks have similar charts. It fell from Rs 300 to Rs 220 and then stopped at Rs 220. It saw almost 40 percent decline in just few weeks and at Rs 220 it started cracking and yesterday it broke down after that big decline. So, there was a trading range and a breakdown from that trading range, which suggests significant declines are in the offing yet. However, sometimes these ranges occurs midpoint in a decline. Therefore, BOI is a short selling idea, not only is it short selling for today, I think traders could even carry this forward. Q: How would you trade Karnataka Bank? A: Karnataka Bank was on the rising spree on the back of rumours and so-called merger ideas, whatever else that went off. It has fallen from Rs 150 to Rs 106, another 40 percent decline. At Rs 106 it said it's going to stop. That trading range is breaking on the downside, which means it is going sub-Rs 100 now. I do not know what is going with the banks. Obviously the charts are not at all conducive. It is a short sell, not only for today, one can carry it if this stock closes weak. Disclosure: Sudarshan Sukhani has no holdings in the stocks discussed. _PAGEBREAK_ Q: Is Exide Industries a better looking chart now? A: It is a much better looking chart, from Rs 140 it fell to Rs 120 and then stopped there. Unlike the PSU banks, which have started cracking, Exide has broken out on the upside. So, it is certainly a far better chart and among midcaps there is hardly anything one can buy into. Therefore, Exide is one of the few exceptions. I think this is a trade one want to take for the day. Today seems to be building on yesterday's momentum and also carry it forward. Q: You have a short call on Jindal Steel and Power (JSPL)? A: It started from Rs 600, it keeps on coming down. JSPL had a small rally and we were not convinced of that rally and then it went into a trading range and that was a bear market rally. Anything that falls so much will rally a bit, give relief gains and also enable shorts to exit. That's exactly what has happened. Some people have taken profits, the rally is over, it is resuming its decline and now it should go below Rs 200; a very poor chart, a short sell. Q: Aditya Birla Nuvo is on your buy list today? A: It was having significant resistance at Rs 1,100, it wasn't crossing that threshold. Yesterday, it did that. It is not a very attractive chart but at least it is suggesting that there is strength in it. This year has been rewarding only strong stocks, nothing else. So, it is one of the stronger stocks. Today it should build on yesterday's breakout, there is momentum on the upside and Aditya Birla Nuvo is not exactly a day trade because it is not a very volatile stock but I would recommend building a position in it on the long side. That breakout should see it go higher. Q: A very flat kind of start. Is it a good idea to play the Nifty or is there more juice on something like the Bank Nifty today? A: The Nifty is going to be choppy so day traders can still buy those dips, sell those rallies, take short and long positions and go for 10-15-20 points. I think there is money because there is volatility, beyond that the Nifty is not doing anything. It is the Bank Nifty where the big story is developing. It’s still not developed. The Bank Nifty at 10,900 is on the verge of breaking down. That 10,900 level is equivalent to 5,550 for the Nifty. It is as if the Nifty is breaking down from that range and it is the equivalent move that the Bank Nifty is doing, the long-term charts are horrible, just to keep this in perspective in May 2011, just two years ago the Bank Nifty had bottomed out at 7,700. I wouldn't be surprised if we are going towards that number, not necessarily that number but much lower than where we are. _PAGEBREAK_ Q: Of the outperforming cluster when you look at charts of an ITC or Tata Consultancy Services (TCS), which one would you have higher conviction in? A: I wouldn't touch fast moving consumer goods (FMCG), absolutely not. Hindustan Unilever's price action yesterday was baffling to say the least. Only technical factors can explain this and it is not going to be sustained. ITC is far away for any trading call. It has to be TCS and I had said that with a lot of reluctance, but at least IT is a buying opportunity on a mild correction. FMCG is not even that. Q: What about IT stocks, which of them looks like the cleanest long call? A: Tech Mahindra and Wipro appear to be giving more upside with all the pain that could come; they still suggest higher levels are coming there. Among midcaps it is Hexaware Technologies; it is giving a perfect chart. The gains that it has notched are going to be replicated again. Q: What do you see on the chart of rupee-dollar? There have been reluctant rallies to the zone of 59-59.5/USD; do you see it sticking here?  A: That is a short-term call. It could move around and chop around but it is likely to move up above 60/USD and a lot of dollar buying will occur by traders when it crosses 60/USD. The Sebi has increased margins on currency trading in India but I do not think that will deter traders.