Market may consolidate; be on long side: Sukhani

In an interview to CNBC-TV18 technical analyst, Sudarshan Sukhani of s2analytics.com shared his reading and outlook on the market.

See CAD narrowing, two rate cuts post June: Credit Suisse Below is the verbatim transcript of Sukhani's interview with CNBC-TV18. Q: Is it looking like it has lost its momentum a bit or is the trade still a long one on the Nifty? A: Nifty is losing momentum and the trade is still a long one. So both aspects are to be kept in mind. It is losing momentum because we went to 5,950 and we are struggling to cross those levels. The SGX Nifty suggests we will do that today but it is still just a few points rather than a big roaring upside. So, we should be careful. This market is now willing to go into a consolidation or a dip but the trend is still up. So the trade is on the long side. Yesterday we suggested okay, take intraday longs. Today given the fact that the market is now coming close to 6,000, take intraday longs again and carry them forward if the market closes above 6,000. That would be a sign of strength. Q: Let us talk about banks that looked a bit sticky yesterday, you would sell Punjab National Bank (PNB) this morning? A: Banks are still for selling. Of course, if markets gain momentum during the trading day then maybe we can step aside and do nothing with the banks. However, I would suggest that PNB is a selling opportunity. It is failing to go above any kind of resistance levels. Yesterday it did bounce off its lows a bit but there is overhead resistance. So any rally today would probably be a perfect opportunity to build a short position here. Q: We were discussing the possibility of a further upmove in the metal name, you expect more upside in Hindalco Industries this morning? A: Yes, I would. I said that we are getting these basing patterns and there are some short-term upmoves. That is available in Hindalco Industries even today. Yesterday, it broke out of a bullish head and shoulder pattern giving us an eventual target of Rs 116-117. Clearly that is not today’s target but if it has to go from Rs 101 to Rs 116, it will go up on many days. So hopefully the trade is now to be on the long side in Hindalco Industries as an intraday trader or a swing trader. I would be a buyer here. Fortunately, Hindalco Industries offers us many opportunities of going long, equity, futures and it has liquid options. So, there is a lot of ways in which you can build long position. Disclosures: I do not have holdings in the stock discussed. _PAGEBREAK_ Q: You are buying Bharat Forge, this one has not been on your list in a long time? A: I am buying it. It has not been in our list because it had become very choppy. It was falling, rallying but now it seems that Bharat Forge is willing to go higher. A v-shaped rally then took a pause and a small decline was essentially a flag. That flag is over. Yesterday we saw big move and that is a beginning or a precursor of a much bigger move in Bharat Forge. In any case, it is a blue-chip stock so that is not a problem. I would be a buyer here. Q: Gujarat State Petronet Ltd (GSPL) is on the sell list? A: GSPL is in a bear market of some kind. There is a sharp rally. That rally turned out to be a bear market rally and it is now on the verge of breaking support that it made earlier and also making a very bearish pattern. Now it is bearish after a sustained decline. That tells us there is nothing in it. So, there are two ways of trading it. There are two reasons why we want to go short. First the pattern tells us to go short and second in the very unlikely event that it does not go down, it is not going to go up. So there is a certain amount of protection here. Q: Getting back to the auto space, you have a buy on Hero Motocorp for the morning? A: Yes. It has been a favourite and then it fell. We had a V-shaped rally in Hero Motocorp almost similar to what the Nifty did from 5,500 to 5,900. That rally then took a pause and then it is resuming its rally again. It is a wonderful chart to be in on the long side. Small flag tells us much higher levels are coming. For today, it can develop a reasonable amount of momentum. If the trade is working out, do not make any intraday trade, carry it home. Q: You have a buy call on Ranbaxy Laboratories? A: Ranbaxy Laboratories rallied from Rs 370 to Rs 460. That by itself tells us there is strong momentum. A low has been made, probably a bear market or rather a bull market bottom is in place and the trend is on the upside. Pharmaceuticals itself is doing very well. After a consolidation of many days, Ranbaxy Laboratories is probably now willing to go higher again. This is just a beginning of what could be a bigger rally. We want to be a part of it as a short-term trader. Position traders should consider buying it and holding it for a few weeks. Q: What would the first call be on the Nifty? A: We will wait for 15 minutes and then go long in the Nifty. Our stop losses will be tight, 20 points below our entry price. If it closes above 6,000, we carry positions forward. Q: How about Mahanagar Telephone Nigam Ltd (MTNL), yesterday’s big mover? A: We avoid it completely. That was a one of event - we do not go for that. Q: What do you think about Reliance Capital? A: Reliance Capital is a better opportunity. It has built a base and broken out. It is worthwhile going long there. Q: What about Mahindra Satyam? A: It has just started a rally after a big decline. I would be long in it.