Bullish on Nifty, target at 5200: Sudarshan Sukhani

Last week was the best weekly performance in 2012 for the Indian market with the Nifty gaining nearly 5% last week.

Euro zone finance ministers on Sunday agreed to lend Spain up to 100 billion euro to help its battered banks. This is seen as a huge positive for the global markets. In an interview to CNBC-TV18, Sudarshan Sukhani of s2analytics.com says, he is upbeat and bullish on the market now. "We should be on the long side of the market," he asserts. The current rally, he says, has a target of 5,200. "Today morning after a gap up, when the market cools down, there is still justification for initiating a long trade," he adds. Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video. Q: We have got to the 5,050 mark by last week. How would you approach the index now? A: We are upbeat and bullish; that came about, when we crossed 5,000 again. We have a trading range. First crossing of 5,000 was a failure because we went all the way down to 4,800, but that's the way markets behave. We have had a second crossing of 5,000. There is a sufficient amount of momentum to suggest that this one will hold. The target for this rally is about 5,200, give or take a few points. It could exceed, it could undershoot. It doesn't look like undershooting. So, the view is we should be on the long side of the market. People should have been long on Friday. Today morning after a gap up, when the market cools down, there is still justification for initiating a long trade. Q: BHEL has good last week, what would you do with it today?
A: BHEL has made a double bottom. Its bottomed out at the Rs 195-196 area. Its rallied and crossed the Rs 210 threshold. It suggests that BHEL may be going through a reversal from the immense bear market to an uptrend and that uptrend could lead to something more stronger, but that's unforeseen as of now. But the patterns are that we are seeing a reversal and these reversal patterns don't necessarily stop at the target, they usually overshoot on the upside or on the downside. So, BHEL is an excellent buy. It's a positional trade. You buy options, buy calls, buy futures, equity and for a day traders today's rally should see BHEL as one of the leaders. Q: The only sell in your list for today is VIP?
A: VIP is falling and making new lows consistently. We have been downbeat on this stock and I think the prices are justifying it. So, even in this rising market there will be some stocks which are going to do miserably and VIP is in that group and so is Educomp, although its not there in my list today because VIP suggests more lower levels to come and its not a good idea to go long. Q: From the star sector of last week, Central Bank is a buy today?
A: It's a buy, its made a perfect bullish head and shoulders pattern and its on the verge of a breakout. Last week I said PSU banks are likely to be outperformers and that's only because all of them were making these patterns. Central Bank is just a selection. The theme here is that PSU banks should do very well. Central Bank because the pattern is now on the verge of a breakout is the stock that I have focused today. Traders can do well if they focus on any PSU bank of their choice. Q: There was some strength in metals as well and you would play that via SAIL?
A: Its charts are better than Tata Steel and non-ferrous metals, Sterlite. SAIL is probably the best chart in the steel group. If there is going to be traction in the market I think SAIL should outperform its peers and should participate in the rally with the Nifty. SAIL's charts are very good, making visible and clear bottoming out pattern. So, these are normally reversals. SAIL has been on the buy list earlier although it did not do anything, but I think this time it will. Q: You have got a couple of large cap in your list as well on the buy side. Bharti is one of the buys?
A: Yes, because Bharti went down Rs 280-290 and then bounced. A second test of that low was done when Nifty tested 4800 for the second time and that test has been successful. In case of Nifty we have broken out, but in case of Bharti we have not yet broken out. That means that some stocks go with the market, some earlier and some will follow. I think Bharti is going to do that breakout above Rs 305 level and there are significant rallies here. Rs 315-316 is the short term target, but I think it will be about Rs 325-330 before Bharti takes a pause. Q: You think Coal India is also headed higher from here?
A: Yes I think so, although among all the stocks that we have discussed on the long side. Coal India has weakest chart patterns. Stocks like Central Bank, Bharti they have all made basing patterns and now they are breaking out. Coal India did not do that. It made a V shaped reversal. It went on falling to Rs 300 and suddenly it started going up. So, that to me is a stock that dose not have a base and is really a suspect.
With all of that negatives Coal India did find support at the right point at Rs 300. There was a rally, that rally was sustained on Friday. So, I would expect Coal India to continue its upmove. If it continues it upmove then Rs 350 is the target, although of all the stocks Coal India would be my last preference for the day.
_PAGEBREAK_ Q:  How the indications on the pre-opening shape your trading strategy on the index?
A: We have been long in our positional trades for some time, that is maintained. We are reaching our targets. The targets are 5200, but its not necessary that the exact number is hit. So, the idea now is to take profits if the Nifty starts moving above 5150.Thats the broad area in which profits would be taken on long positions. If that is so then positional traders should now be ready to exit rather than take fresh entries.
For short term traders today is another opportunity to go long as an intraday trade, wait for a small dip, or a small consolidation because I think we have another 50-100 on the upside. Q: The star last week was L&T, is t good for more or would you take profits there?
A: I would take profits there. The stock is still a buy, but I would not buy it. The key here is, its run up. Reversion to the mean can easily be expected. So, L&T is not an intraday or a short term buying opportunity. Takes profits and wait for new signals. Q: What about something like an HDIL from real estate after last weeks rally?
A: There is more probably there because the leader there DLF has made a very decent bullish pattern and broken out. HDIL and Indiabulls Realty are doing the same. So, I don't see that the market will suddenly stall. Some sectors will keep momentum going and real estate seems to be in that. So, HDIL would be a buy. Wait for a small dip, don't buy on a gap up, wait for some opportunity, but it's a good idea to go long. Q: One of the surprise gainers last week was Jet Airways. Technically how does that look?
A: Technically it looks good. Its gone through a very big spike last week. But in reality there are some trading tactics. I would not buy Jet Airways after that big rally. It has to cool down, it has to consolidate before an actual entry can be taken. Anything that starts moving up, breaks previous levels has to be classified as bullish, but we don't have to trade all of them. Q: How is Axis Bank looking on charts?
A: Axis Bank has much better chart. The fact that it did not rally on Friday means that it is going to catch up now. So, Axis Bank is an excellent choice for intraday trade, for something that runs over a couple of days, till this market stalls. I would say its one of the better banks to go long into. Q: What would you do with SUN TV from the midcap space?
A: For some reason it went up on Friday. It made a 10 day high, so I cant say you should go and short it, but I would not buy it at all until that rally is proved to be genuine. The only way to prove that is if SUN TV consolidates for a few days and does not go down. So, theoretically it's a buy, but in practice it would be a complete avoid. Disclosure: I have no personal holdings in the stocks discussed.