Mkt to be choppy, go long on declines: Sudarshan Sukhani

Technical analyst Sudarshan Sukhani of s2analytics.com cautioned of choppiness creeping into the market today since it didn't respond much to FDI in retail going through in the Rajya Sabha.  

On Friday, the Nifty closed down 23 points to close just above the 5,900 level while the Sensex lost 63 points to close at 19,424. "We could see 50 points gains in the Nifty, stalling just before the 6,000 level and some declines also," he said in an interview to CNBC-TV18. However, he added that the market trend is upwards so one should go long on declines and exit quickly. Also read: Cues that will pave way for Nifty's course today Below is the edited script of his interview on CNBC-TV18 Q: Just in the very near-term are you getting the feeling that the index is getting a bit range bound? A: That is right. We also saw last week how the markets refused to respond to so-called good news and that is the first sign that momentum is waning, the markets could be choppy. It means that we could see 50 points gains in the Nifty, stalling just before the 6,000 level and some declines also. In a choppy market we must go with the trend, the trend is up. So the idea is when these declines come go long and also exit quickly. Q: Oriental Bank of Commerce (OBC) is a buy in your list today? A: Oriental Bank of Commerce had a trading range and it broke out from that trading range. That is something that occurred in a lot of a public sector undertaking (PSU) banks, so OBC is not alone. We have been upbeat on PSU banks for sometime now. OBC has not yet completed its range target, after the breakout. We saw a big decline on Friday, and that decline offers re-entry opportunity for a long trader. So, OBC is a buy and this one decline gives us a better entry price. PSU banks are still likely to move higher and OBC’s targets have yet to be met, so a good opportunity to buy today. Q: Do you think there is more upside in Tata Global Beverage? A: I think there is more upside in Tata Global. It went through a deep correction, from Rs 178-179 to almost Rs 155 and that deep correction is over. It is already in an uptrend. The first target for this upmove could easily be Rs 177-180, which was the earlier high and that’s lot of headroom from current levels. For day traders, the move could start today and they should enter it. Position traders just have to carry the positions till targets are reached. Q: You are selling UltraTechCement today? A: Yes. I think the correction is not yet done with. There was a big cement day last week, when all cement stocks ran up and that was the end of it. There must have been a follow-through on these up and down moves, but there was no follow-through that day. Subsequent to that, UltraTech went into resistance. It couldn’t cross that resistance and it slipped on Friday. Chances are that the resistance will hold, and it will go down slowly inch by inch. UltraTech is not a roaring short sell but one can try to take advantage of a correction, in an ongoing upmove. The correction is tradable. Q: You are also selling Bhushan Steel? A: Bhushan Steel has a disappointing chart. It is making a large intermediate tops but it is difficult to say, whether intermediate tops will workout, in a market that is moving up. But we at least know that this is not going to go up in a hurry and if it is going to workout, there is a lot of downside possible. Metal is not a very good sector to be in. The sector is momentum driven, so sometimes one could enter but it is not a long-term play. So, on both counts i.e short-term as well as intermediate term, Bhushan Steel becomes a sell. _PAGEBREAK_ Q: You have been bullish on Mcleod Russel? A: Yes. It has added 100 points from Rs 270 onwards. The message we get from the market is that if something is going up then it keeps on going up. Mcleod Russel is on a verge of making a lifetime new highs, so we do not challenge it. We just go and buy it. It has rewarded the traders every time that they have bought it. I hope that will continue. Q: Hero MotoCorp from the largecap basket? A: Hero MotoCorp is a different story. It has not done anything and that is the story. For the last two weeks, it is in a very narrow, tight trading range. The trading ranges then eventually resolve themselves on the upside, or on the downside, whichever the direction. The question is will Hero MotoCorp move down below Rs 1,800, which is a strong support leve for it. The answer seems to be that is unlikely. So, I am banking on risk, and saying that the breakout will be on the upside. It is a trade with very low risk. If it doesn’t work out, if it goes below Rs 1,800 then get out. Q: It was still the Bank Nifty that was the outperformer last week. What kind of trading positions should one keep on that? A: I think we should still remain long in the Bank Nifty, although for the Nifty the best trading is to stay away but a long position is justified for Bank Nifty. If you already have longs then carry them, otherwise search to go long intraday. That is the only index that is offering some opportunities for the trader, on the long side or the short side. Even the CNX IT is not prone now for any further short selling. So, do not look at a target because the targets will depend on how the market itself behaves. Look at 75 to 100 point move in the Bank Nifty, that should come about. Q: How would you approach things for the Nifty first, given this very quiet indication from the pre-market opening? A: I wouldn’t buy it at current levels where it is expected to open, eight-ten points higher. The buying in Nifty should be done only when there is a sharp correction and our risk is as less as possible. We do not want to buy highs, in this choppy market. Q Two question on that - what would your comfort level now buying the Nifty and where have you kept your stop loss for long positional trades which are still on? A: The stops are now at 5,850 and that’s on a closing basis. If the Nifty is closing below 5, 850, we will get out. We got in at 5,630, so there is still money in this trade. As an intraday trader, my comfort level in the Nifty is a decline of at least 30 to 40 points from whatever highs it makes during the day. That is the point where I want to buy because I do not see this market running away in the next two-three days. There is no level; it is the decline as explained. Q Is the juice gone on the short trade in Hexaware Technologies, after the 9 percent fall or can you still make money on the downside? A: The trade is still on the downside but it is very unlikely that you will make more money. This stock has to consolidate now and then decide whether it wants to go further. So traders should be prepared to take profits and cover short positions but the trend is down, no doubt about that. _PAGEBREAK_ Q: Is the correction done on DLF? A: No it is not done, it is still continuing. DLF has been a relative underperformer in the real estate section and that underperformance will continue in this choppy market. Q: What about Punj Lloyd? A: Punj Lloyd is a buying opportunity. The problem with Punj Lloyd is the sharp rallies, and the equally sharp declines that it gives. After a sharp rally, the market is not going to keep on going up relentlessly and that is the problem. So, entry in Punj Lloyd should be done when we get a correction in the next few days and that will come about. The fact that it has broken out of a trading range, broken out of its earlier highs, tells us we should be buying it. Q: Mahindra and Mahindra (M&M) is showing signs of life again, after going through a corrective phase. Do you think the worst is over there? A: I think the worst in M&M is over. The worst in M&M was not that bad; it just went into a consolidation. Mahindra & Mahindra has shown that a good stock will keep on going up and I assume there is a good reason for that. So, M&M is just coming out of a small consolidation and a small correction and it is worth buying for intraday traders and worth buying for positions. Q: Is the correction in IndusInd Bank just a temporary dip? A: I think so. These stocks will go through a big boom before they hibernate for many weeks, and months. So, that big boom is probably still ongoing. So this small correction that we saw could end and IndusInd could surprise us by giving a big upmove. So, there is a buy here. Q: How about United Phosphorous? A: The stock is doing nice things. I was actually quite downbeat on it but it is possible to go long in it, in spite of the gains. There is probably more upside to Rs 135 even Rs 140. But just, time it. In the sense that all buying should be done when the market is quiet. So when the stock goes into a quiet mode intraday, that is the time to enter. Disclosure: I have no holdings in the stocks discussed.