Remain long, Nifty may see 5200: Sudarshan Sukhani

Yesterday, the Nifty closed at one-month high. The index hit an intraday high of 5,010.45, before closing up 133.80 points or 2.75% at 4,997.10.

In an interview to CNBC-TV18, Sudarshan Sukhani of s2analytics.com says, the Nifty is going to cross 5,000 today. “The trading range of 4,800-5,000 is breaking on the upside,” he adds. His target on the index now is 5,200. “It requires a certain amount of patience. It won’t come easily. It will come with some choppy movements,” he asserts. He advises positional traders to remain long with a stop loss of 4,900. Also read: See 10-15% upside for India in dollar terms, says Morgan Stanley Below is the edited transcript of his interview with CNBC-TV18's Mitali Mukherjee and Sonia Shenoy. Also watch the accompanying videos. Q: Yesterday brought us to the brink of 5,000. How would you trade the index this morning? What kind of stop losses should a trader be working with now? A: I would like to say that we caught this rally correctly. We were upbeat on Tuesday, and Wednesday morning. Last evening, I had said to carry positional trade, do not exit because we are on the verge of a breakout. I am just carrying that theme now. We are going to cross 5,000 today. That tells us that the trading range of 4,800-5,000 is breaking on the upside. These are important technical moments. We do not have to push and take profits because targets are 5,200. It requires a certain amount of patience. It won’t come easily. It will come with some choppy movements. But I think it should come. So, those who are long as a positional trader should remain long. Their stop is now 4,900. That is little wide. But if one is expecting reward, one should be prepared to give some space to the market. Q: You have a buy on Infosys for this morning. You expect that to be upbeat? A: I think there is still an opportunity today to buy the Nifty on dips after 50-70 points gap up and that will apply to many of the stocks. Infosys seems to be suggesting that there is a 100-150 point rally in it. It’s difficult to say where it will open but if there is space even after the gap up Infosys is looking at a target of Rs 2,550, which is where the gap begins to get filled and it is making a very bullish pattern. It’s better of the four majors. Q: You expect more upside in Hindalco? A: I expect the upside to start and I would be gratified because I own shares in Hindalco. I think Hindalco is confirming a bullish head and shoulder pattern and that gives us a target of Rs 136-137. But once the patterns are reversal patterns then it need not stop at Rs 136. So somebody who is willing to take a positional trade in Hindalco then this is the right time. There is an imminent breakout for day trader that should take place today and day trader should ride the trend. If the trade is closing in his favour then he should also attempt to carry it forward. Q: You think Indian Overseas Bank (IOB) should be played as long today? A: I think so. Indian Overseas Bank has been a disastrous performer on the downside. It fell from Rs 105 to Rs 72-73, which is a 30% decline but that seems to be behind. Now a lot of the small public sector undertaking (PSU) banks are high beta plays, just as they fall dramatically they also rally in the same way. IOB has been making a decent base. In recent day it’s been outperforming the bank index and the Nifty, in the sense that it did not fall further. I would say that today there is a strong buying opportunity and probably also for swing traders and people who want to carry position. This market maybe changing its stance slowly, and one should be trying to go long in high beta stocks.     Q: What kind of targets would you set on IDFC? A: Infrastructure Development Finance Company (IDFC) has come in my buy list earlier also because it had already started making those higher highs-higher lows pattern suggesting that the declines are done with. We have a modest target of Rs 135 for the day traders for couple of days and the stock is beginning its own bull market. So here there is a justification for buying for few months, for maybe a year. It’s probably going to be an outperformer.  Q: You would choose to sell HPCL for the day? A: Hindustan Petroleum Corporation (HPCL) is now in a trading range. Two days ago, it hit the upper end of its trading range and is sliding from there. It should come down to Rs 285-290. So the target is Rs 290; it’s the broad area of Rs 285-290. Now the point is that traders do not have to sell anything if the markets are upbeat. But if one wants to hedge, if one wants to take a position, if one senses that oil marketing is weak anyway, then HPCL is a good idea on the short side.   Q: You have a sell on Colgate Palmolive (India) for this morning? A: This aligns with the theme that the fast moving consumer goods (FMCG) is now topping out and so are some of the major pharmaceutical companies. That seems to be reasonable because the charts are confirming that the rich valuations will be corrected and once the markets takeoff then the defensives take a backseat and that is what is happening in Colgate. There is a decline that is going to go to perhaps Rs 1,000. It’s a good stock so it may not. But there is a decline in the offing. Our targets are Rs 1,090 and probably could be exceeded on the downside. It’s a relatively safe bet. One could take this position because it also reduces risk since you will be having long positions and couple of short ones.  _PAGEBREAK_ Q: What kind of immediate resistance points would you set out on the Nifty beyond this 5,000 level? A: Five thousand is a strong resistance. So, 30 points higher or lower, still keeps that resistance intact. We want the Nifty to close above 5,000 today and follow it up by successive closes above this level. The other point is that short-term traders who have carried forward positions will still get the benefit of a gap up and should consider taking profits. Position traders who think this is a breakout and it could easily be must understand that their stop loss is 4,900. Q: How would you approach Hero MotoCorp this morning? A: It was in our buy list last morning. Hero MotoCorp has more upside; the target is Rs 2,050 target and it could go up. If this was a correction in Hero MotoCorp then the chances are that eventually it will cross its earlier high but that will take some time. But it is wise to be positioned on the long side in this stock every time. Q: What about L&T? A: Larsen and Toubro (L&T) did not give us the rally that Hero MotoCorp did earlier. It was in a bear market. It is turning around from the bear market. L&T has rallied almost 15% in the last three-four days. There is only so much that a stock can do. So, on the charts, the short-term trend in L&T is and one should be buying looking at the target of Rs 1320 or thereabouts. But in reality this is not a buying opportunity after a 15% gain. One has to wait for a consolidation or a dip. Q: Had a look at Apollo Tyres chart? A: Yes and in spite of yesterday’s rally the chart suggests a strong pattern of distribution, so I would be downbeat on the stock. The stock had been a favourite earlier but the charts keep on changing. I would expect a downside target and that target may begin to come today or tomorrow. I am a seller in Apollo Tyre and not a buyer. The distribution is clearly visible there. Q: What about GMR Infrastructure from the infra rally that we had yesterday? A: GMR Infrastructure was in a trading range for more than a month and not just GMR but a lot of infra stocks crossed the resistance levels and closed significantly higher. GMR is a buying opportunity because of the nature of the volatility that these stocks carry. It is good to wait for intraday consolidation or dips rather than just go and rush to buy at the open. I wouldn’t advice any buying at the open today. Q: Do you see more buying action in Pantaloon Retail? A: The short-term trend has changed. It made a bullish pattern and broken out from that, so I would buy into the rally. In reality I wouldn’t buy Pantaloon because I am not very keen on the stock so far. But if somebody is going by chart action then there is buying here with a target of Rs 175 and that target could easily be achieved. Q: How would you approach Reliance Power for the day? A: It was in a trading range just as GMR and it burst out of that range in style. Most infra stocks did that yesterday. But whatever the reason may be the message now is that Reliance Power is also a buy. We have modest targets of Rs 103-104. Do not buy at the opening. One must wait for some kind of a setup, which is either a dip or a consolidation. Q: What kind of trends are you seeing on these two commodities and the prices there; on crude that’s back above USD 100 and on gold as well? A: The trend is clear on gold. It’s making new highs so while there will be some setbacks in the sense that we will see some corrections. I think gold in rupee term is setting a target of Rs 33,000 per 10 grams and if the dollar becomes more expensive, I wouldn’t know how that will come about but that is the target that I am working on. I am not clear on what crude is doing. The decline was astounding for me and now the small rallies. So I do not have a view on crude now.