Nifty to trend down; banks may outperform: Sukhani

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

Markets Weekahead: Shares may remain volatile; rupee key Below is the verbatim transcript of Sukhani's interview with CNBC-TV18. Q: Your views on the Nifty and how you would approach trade this morning? A: The Nifty has two undercurrents. The intermediate trend is down; a bearish pattern gives a target of 5,750 and maybe even lower. There is nothing to say that this has changed. The trend is intact on the downside. However, much more interesting for short-term traders is what could happen in the next two to five days and here we reached a strong support level of 5,880 on Friday and on Thursday twice. Actually, we went twice to that place and stayed there. Today's suggestion is that the SGX Nifty is higher, which suggests that the minor support levels are intact and one could see a tradable bounce on the upside. It is too early to say that. However, I am just saying that traders should be open to the idea that a short-term up move could have started, thanks to this gap up. The broad market trend is down, there is no confusion but banks could outperform on the long side again this week. Q: You have a sell call on Sterlite Industries? A: We also have positional shorts. I do not think they are going to change that. Sterlite has been a disappointing chart. It comes down, makes a support level and then breaks it. It is a classic down trending chart and unfortunately again that earlier level of Rs 91 is broken. It is amazing to imagine where it is going, but Sterlite is something which one can not only sell today even in spite of a fact that the Nifty could easily see a rally, but it is also a positional short. Q: You are selling Jindal Steel and Power (JSPL)? A: We have been selling JSPL since Rs 600 rather Rs 650. It is amazing how the stock has taken a single directional move. There was one correction in-between on the upside otherwise it is doing the same thing as Sterlite is doing. JSPL is on a much larger scale, there was a small consolidation and that consolidation broke down on Friday. It suggests that lower levels are coming and if there is a gap up or a rally today, it is even better because one is selling in strength. The trade is clear, we want to sell it. Disclosure: Sudarshan Sukhani has no holdings in the stocks discussed. _PAGEBREAK_ Q: There was some relative strength in IT as a bracket though; Wipro is on your buy list? A: Wipro is giving a sense that it is making a double bottom. It has been an underperformer among the four top IT stocks, but that is also cyclical. Sometimes one stock becomes laidback while the others take the lead. I do not think Wipro is going to stay in the background for much more. The fact that it tested its lows, it is bouncing, on Friday also it showed good strength on the upside when the broad market was down, suggests that some kind of base is being built or is already intact and is ready for a breakout. I would be a buyer in Wipro, not just today but also willing to enter it again and again. There is a big up move coming. Q: Havells India is in your buy list today? A: Havells has been a favourite and it is making lifetime new highs. It did that then it pulled back for four days, which is exactly what a good stock should do. Good shares do not run away, they give lot of opportunities to traders and investors to enter. It is a staircase kind of rally and on Friday the big move in Havells suggested that the small correction is over and it is heading again towards lifetime new highs. So, it is a stock we want to get into today. The problem here would be what if it opens with a big gap. I do not know. However, the trading tactic issue comes into play, wait patiently for an intraday consolidation and then go long in it. The trade is to be on the long side. Q: You are selling Gujarat State Petronet (GSPL)? A: It is a very disappointing chart. Gujarat State Petronet was one of those erstwhile favourites which could do no wrong. There was so much hype associated with it. Now the exact opposite has happened. It was in a small trading range and that range took the shape of a descending triangle. After a big decline a descending triangle is a bearish pattern and suggests that there is much more downside left. It is not over. So, GSPL is a short sell. The metals including GSPL, the petrochemicals are not going to do what the Nifty could do today or for the next two-three days. Q: You have a long trade on Aditya Birla Nuvo? A: Aditya Birla Nuvo has been a favourite. I think AB Nuvo has bottomed out. It has built a large base. It is now doing what Bata India was doing, not exactly the same because businesses are different. So, there was a rally and after that there was a small decline. We are buying on a dip. I would assume that this rally sustainable and it is not only a day trade but also a position trade. Q: How are you trading the Bank Nifty and what kind of levels emerge now for the Bank Nifty? A: We have seen the Bank Nifty underperform the broad market but that stopped last week towards the end. The last three days the Bank Nifty was flat while the Nifty was retreating again and again from higher levels. The first message this gives is perhaps the Bank Nifty is now primed for either a choppy range or even a small rally. So, for the short-term and we have the undercurrent of the intermediate term, the Bank Nifty is very bearish. However, for today and tomorrow the Bank Nifty could be a buying opportunity. So, like Nifty I am open to buying it at whatever levels the market opens and then after cooling off period of 15-20 minutes. _PAGEBREAK_ Q: How much of a rebound do you expect to see in Nifty in case you are trading it long in the short-term? A: unfortunately 50 points will already be taken away when the market opens, if it opens at these levels. But still the first of the resistance levels is above 5,980. That will give some kind of a scalping opportunity to the trader, take 20-30-40 points on a dip, buy it and then sell it. The trade would be on the long side. I do see the Nifty facing any kind of momentum once it goes beyond 6,050-6,080. That is the maximum this rally should take us and this level is possible because market can surprise us. Q: Is there a sectoral trend that you are seeing in terms of sectors pulling the market down because last week was quite widespread in terms of its weakness? A: Yes, it was. The oil and gas group which is also a very large heavyweight in the Nifty. That is fairly bearish. Oil and Natural Gas Corporation (ONGC) is cracking down, we have seen how Reliance Industries goes up and then hardly ever sustains the higher levels and retreats immediately and the same applies to GAIL India, which is a smaller capitalisation stock but is making new lows. Therefore, oil and gas is something that is probably looking at lower levels repeatedly. IT and pharmaceutical are exceptions. I wouldn't short any of these two sectors. However, apart from this even banks on a rally will become an ideal short selling candidate.  Q: Your views on the currency because you trade that. What kind of levels are you working with on the rupee? A: In the Futures market rupee has made new highs. We are looking at a target of about 59.50/USD; little shy of 60/USD; it will not immediately, there will be pulls and pressures. However, the rupee is now a positional trade rather than a day trade or a short-term trade. It is much better to wait patiently; I think the levels will come.