Next level of support for Nifty at 5400: Sudarshan Sukhani

The Indian market has been subdued over the last many sessions. In an interview to CNBC-TV18, Sudarshan Sukhani, s2analytics.com says the next level of support for the Nifty is 5,400.

Q2 earnings: 9 stocks that beat estimates; 10 that didn't Below is the edited transcript of his interview with CNBC-TV18's Mitali Mukherjee and Sonia Shenoy. Q: How would you approach the Nifty this week? A: We continue to look for a decline. The market needs to prove that it can go up by 50-100 points. Then only we can say that this was just an aberration and the market could probably resume that uptrend. Till then, the view is that we are looking at a decline. The next level of support is 5,400. It does not have to reach 5,400, but I suspect that lower levels are coming in. Q: There was quite a bit of delivery based selling in many banking names, from that lot you would choose to sell Punjab National Bank (PNB) today? A: Yes but I would like to explain that markets work in context. We have had two big down days or two large range days. Today is expected to be choppy. So any trading ideas that we talk about must be taken in the context that markets are likely to remain choppy. So in that choppy condition, you may or may not take a trade. But within that overall environment, PNB continues to be a sell. We have been bearish on some of these banks for a long time now and that bearishness continues and if you see a small rally, look to short it. Q: What about DLF where there has been quite a bit of weakness for a while, would that be a good shorting candidate as well? A: Yes, it continues to be a short. With reference to the market context that after two big days, markets can be choppy and day traders can be literally chopped out. So do not get into environment. But if you sense that the markets are weakening again then stocks like PNB and DLF are the first shorting candidates. Q: Raymond is biu for you? A: Raymond is an excellent chart. It has completed its bear market, it is continuing to move up, days like today or days like last week are actually buy on dips opportunities for Raymond. There is no indication that the stock is breaking down and it is not. Raymond is ready to make new highs and we want to buy stocks that are in the process of doing so. In a choppy market, some stocks go up and I assume Raymond will be one of them. Q: Will Rural Electrification Corporation (REC) also go up today? A: Yes. REC has made a fairly bullish pattern but it has not broken out of that because of market turbulence. At some point, the breakout should be on the upside. That means that REC after rallying from Rs 170-220 is willing to go much higher. That is good news. So REC is a buying opportunity. Today what is likely to happen is that the index may not reward anyone in day trading, in short-term trading but individual stocks could be rewarded. So these two stocks for example Raymond and REC should be watched for long positions. _PAGEBREAK_ Q: I have not seen Era Infra on your list ever, tell us about that? A: I have never had Era Infra in my list. What is happening is that index stocks today are likely to be out of focus and we should prefer to look at midcaps. Era Infra as a midcap stock has been in a trading range for months. There is a sense that it is breaking out. It is not a day trading idea, it is not even a swing trading idea. I just put it in my list because in a choppy market, there will not be many opportunities anyway. So here is a stock if it starts giving signs of breaking out, the chances are it could give a very good reward as most midcaps have done. So it needs to be kept in isolation from the other five. Q: You have a sell call on Hexaware Technologies as well today? A: It was a very big disappointment. Hexaware’s rally dissipated at Rs 140, it has been falling. It is making lower highs, lower lows and now at Rs 105-106 it is willing to breakdown from a very strong support level. That is not all. The CNX-IT itself is getting very disturbing, sometimes it gives signs of bullishness, sometimes it changes, which means it is primarily very choppy. So it is not getting sector support either. I think Hexaware is willing to go below Rs 100 and go into two digits again towards that Rs 85-90 level. Q: Would you say it is a market where there is a clear downtrend that has emerged even in the short-term or do you think it is at best volatile and it is just taking its time to settle down pushing its boundaries on either end? A: No, I would say it is a clear downtrend. It is a very fair question because volatile market will then give us a bounce on the upside and that is a different strategy to use. But in this case we have broken down from first 5,630 then 5,580 so there are very clear breakdowns on the charts. I am assuming it is a downtrend. Now this is not a bear market, the downtrend will get stopped or stemmed at some level. We do not know that level. What we know is 5,400 is support. I would not be surprised if we slowly slide towards that. Q: It could be another flat day, how would you approach it on the Nifty first? A: There is no trade in the Nifty. Last week we had suggested that traders must remain in the market because a big move is coming. That has worked out. So those who have been in this market can lighten up their short positions, keep part of it because I suspect we are going lower in the next few days. But today there is no intraday trade. Markets will be choppy, so it is not a good idea to enter the choppy waters today. Q: Hathway Cable that had a 10-11 percent rally last week, how would you trade that? A: I would buy it. It was also in my long-term picks, which we discussed and Hathway is a buying opportunity and ones should not worry about the fact that it has gone up. Even for intraday traders; any small dip or consolidation in Hathway should be used to buy. It is a trade on all timeframes. If you are an intraday trader, a swing trader or a position trader or a long-term investor, it is a good stock. _PAGEBREAK_ Q: Good time to buy a cement stock like Ambuja Cements after the dip we saw? A: Yes, but there is a caution note. What has happened is that Ambuja and ACC have both come to their support levels. My view is that eventually that support will break. So for anyone having a larger timeframe view, this is not a good time to buy. But for today that is only for the day trade Ambuja has come down to Rs 200 where strong support exists. It is possible that we can see a bounce. If there is a bounce or if there is a sense that the prices are moving up, go long in it but keep a tight stop loss, below Rs 200 there is no buying. Q: As we head into the winter session of the parliament, some of these retail stocks are cautious. Pantaloon Retail lost 7 percent last week, how would you trade it? A: The trade would be on the short side and there is no confusion on that. Pantaloon was a short sell earlier also above Rs 200. We felt that it is making lower highs and it is failing to rally and that is exactly what happened. It continues to be a short. I think Pantaloon should eventually come to Rs 160 or even Rs 150 very easily. Q: How about Tata Motors? A: Tata Motors is a difficult stock to trade. We have seen a rally, we have been upbeat then it was stalling, probably some distribution is also there. So for a very short-term trader, there is a short sell here. But I need to explain that if you have a longer-term view; Tata Motors is not a bearish stock. We are just talking of a couple of days when it is possible to take a short position and make money on the downside. Q: Have you been noticing anything on Orchid Chemicals and Pharmaceuticals? A: Yes, we have been noticing it since it was around Rs 180-200. It is falling and we have been putting short calls on it for a long time and those continue. It has broken below Rs 100, I do not know where it will stop but we know there is more downside here. Disclosure: I have no holdings in the stocks discussed.         stay tuned for more.