Nifty to cross 5900 soon; see no trade today: Sukhani

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

Buy at sub-5,760; bet on RIL, shun education picks: Experts Below is the verbatim transcript of Sukhani's interview with CNBC-TV18. Q: Looks like a gap up this morning, how would you trade it on the index? A: We are having these gaps so often for the last many days and the reason is that the Nifty is in a trading range. The trading range is prone to random outcomes inside the range, sometimes we have up gaps, sometimes down gaps and most of these are not tradable. That applies to today’s likely gap up. When we open up 100 points, there is nothing to buy for the short-term traders. Therefore, wait patiently. This market will either go above 5,900 tomorrow, next week or it will retreat back into the trading range at which point we continue to wait. It sometimes gets frustrating to wait but this waiting is usually rewarding at the end of the day when we see a breakout or a breakdown. However, today's market move is no longer tradable, thanks to enormous gap that we are seeing. We have been having a mildly bullish stance in this market and yesterday that bullish stance did not work out, the market went down but within that actual trading has been rather difficult and thanks to these gaps. If the market affirms and closes above 5,900, reaffirms tomorrow then a long position would be certainly justified. Q: Pharmaceuticals are in your buy list today starting with Divis Laboratories? A: Divi's Laboratories had a sharp correction. After that correction it went into a trading range and that is good news because it was building a small base. It has broken out of that base while giving a bullish head and shoulder pattern. This is a reversal. A reversal means that the chances are that the correction is over and its original uptrend has probably started. It is also one of the few pharma stocks where there is potential for reaching its earlier highs and then beginning a new high process later on. So, Divi's Laboratories is a very attractive buying opportunity for today and also for the next few days. Q: Would you say the same of Dishman Pharmaceuticals & Chemicals? A: Yes. Dishman is a slightly underplayed stock. It has given a small trading range, not as impressive as Divi's but it has broken out of it and the fact remains that the pharma sector has still been outperforming and we would prefer to go with the sectors that continue to outperform the Nifty. So, Dishman is now ready to break from a sharp correction beginning a new upmove for itself. It is worth taking a trade on the stock. Today a lot of momentum stocks will open gap up and for the day trader or the swing trader they will become untradeable. Pharmaceutical stocks will still probably be in the trading zone. Disclosure: Sudarshan Sukhani has no holdings in the stocks discussed. _PAGEBREAK_ Q: You are short on Cairn India this morning? A: Cairn gap down yesterday from a consolidation pattern that suggests more downside. Cairn is not giving clear signals. The broad signal in Cairn is of pressure on downside and that downside pressure will continue, it is also not related to what is going to happen today. Therefore, Cairn is a short selling idea, independent of what the Nifty will do. Q: You are selling Punjab National Bank (PNB)? A: Punjab National Bank is making new lows and all public sector undertaking (PSU) banks are doing that. For short-term traders 100 points gap becomes very difficult to trade in and PNB could also open higher. Whenever possible strength during the day gets dissipated in PNB, it is a short sell. I do not think anything is changing in PSU banks. Q: Tata Steel is another one which keeps coming on in your sell list? A: It does and it keeps going down and its breaking the Rs 250 level and the next target for Tata Steel is Rs 210. I do not know whether it will reach there but it certainly a short sell. The strength that we may see in this stock in the beginning is a good idea because then one can build a position on the short side at higher levels; buy Puts, sell Futures. This is not coming up in a hurry.   Q: You have buy call on UltraTech Cement? A: UltraTech is having an attractive chart. It is in a trading range but essentially making a pattern of higher highs-higher lows. Yesterday it broke out of a small consolidation pattern. Cement is doing the right things, it is not high beta sector so it is not running away but it is inching up. Ambuja Cements has done that and now UltraTech is doing the same thing; slowly moving up. Therefore, for a relatively safe trade today UltraTech qualifies, take the trade. It is not necessarily a day trade; it is something to carry for a couple of days. Q: If we start with 5,900ish zone, is there still some juice to play on the index? A: Absolutely not. 100 points is 100 points and traders would be wasting their time. It is a futile exercise to get some more. Only intraday traders who are adapt enough to buy a consolidation after an intraday correction, there are so many ifs. They can go long but otherwise wait patiently, one should not enter the market after 100 point rally, especially when we are not in a momentum driven market. This is a trading range market. Q: What are the charts of Bank Nifty suggesting, could there be a smart pullback or does it make more sense to sell the pullbacks there? A: It makes more sense at this point to sell the pullbacks, not necessarily today but the first sign of exhaustion in the Bank Nifty should be sold into and banks are not giving signs of life, the PSU banks are in miserable shape, some of the best private sector banks are going through a drawdown and a decline. I wouldn't buy the Bank Nifty until it crosses 12,000. That is a long way off. Q: Technically what do you see on the charts of Oil and Natural Gas Corporation (ONGC)? A: The Nifty is doing different from what the charts are doing and it is amazing. ONGC yesterday broke down all possible support levels and has closed at Rs 295 and that is extremely bearish. The fact that it made a new high and retraced that new high suggests that it went to test higher level and it failed and it is now retreating. ONGC's charts are not bullish, they should be but they are not.