Mkt to be choppy; traders close short positions: Sukhani

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

India in for 15% rise by Dec; like financials: Ridham Desai Below is the verbatim transcript of Sukhani's interview with CNBC-TV18. Q: How would you approach trade this Monday morning after the cut we had on Friday? A: The market has different undercurrents so if one is looking at an intermediate term then the undercurrent is bearish. That was explained earlier, nothing has changed. We have confirmed the bearishness on Friday. We have made bearish head and shoulder on the Bank Nifty and on the Nifty so the next one month should be on the downside. However, the other undercurrent is short-term, which is what we are often interested in. I am also a short-term trader. After the big decline on Friday, I do not expect the Nifty to keep on giving these declines. Therefore, today could be a choppy day. Short-term traders would be well advised to close short positions, step aside and wait for the market to give a new direction. These are all short-term views so different undercurrents and different perceptions. Also Read: Global mkts end May in red; things to know as June begins Q: Larsen and Toubro (L&T) lost about 4 percent last week; you would sell it further today? A: Yes. L&T not only lost 4 percent but after the big decline it was in a trading range for three-four days. It has broken down from that range. The market is not willing to price it higher. The next target is much lower. Therefore, given the choppy nature of today’s market, weaker stocks should be sold into and L&T unfortunately in the short-term is a weak stock.   Q: Does Reliance Infrastructure also feature on that list? A: Yes, Reliance Infra has done what the Nifty has done; it has confirmed a bearish head and shoulder. That suggests that an intermediate term decline has started. It is not easy to say whether the decline will get accelerated today or today could be choppy, but theme here should be, if there is any rally in the stock one should sell into that strength, even a minor intraday rally. The essential trend is now down. Q: You are buying HCL Technologies this morning? A: Yes, it is an excellent buy. All are talking about Infosys. HCL Tech, for the last ten days it has done nothing because periods of contraction are then followed by periods of significant expansion. In case of HCL Tech, the expansion should be on the upside, the trend is clear up, it is only consolidating. We are buying almost at the point of a breakout, which is why I also said one need to close position in Nifty. IT stocks could do nice things today and shore up the Nifty at least for one-two days. HCL Technologies is a buy. Disclosure: Sudarshan Sukhani has no holdings in the stocks discussed. _PAGEBREAK_ Q: You are short on Oriental Bank of Commerce (OBC) this morning? A: Oriental Bank of Commerce went through a process of distribution, confirmed a bearish pattern, a descending triangle and that is an intermediate pattern which suggests much lower levels are coming before the stock bottoms out. Therefore, OBC is a sell. Friday’s big decline should see some intraday follow-through today.  Q: Why do you like Ipca Laboratories for the day? A: The first reason is easy; the pharmaceutical stocks have been flying here or there and sometimes they go through small cycles and then they come back. The second reason is technical; Ipca Lab after a big move has been consolidating for last seven days. That consolidation could be a small flag, breaking on the upside and confirming that larger is move is still ahead. Therefore, we are positioning ourselves for a breakout on the upside. Q: CESC had a strong run. In the last two months it has moved from Rs 260 to Rs 330. You see more on the upside? A: Yes. It is a momentum stock. It is not an investing idea. However, as a momentum trader, there is no harm in latching on to stocks that are doing right things. From Rs 250 to Rs 325, the move has been steady and slow. It has not been in a surge of one-two days. So, that is a tradable move. After reaching Rs 325, CESC has done the same thing; consolidated and that minor consolidation is going to break on the upside and assuming that the Nifty remains choppy for the next few days, lot of stocks will go up. We should be willing to buy and CESC is one of those. Q: Looks like it is a quiet kind of start, as an intraday moves what kind of levels you would be watching on the index today? A: On Friday morning before the market opened we caught 130 point move on the downside. That is all a trader needs. Trading becomes difficult when new traders want to trade day after day, hour after hour. That is not a good idea. Today the idea is that if one has short positions, one should take them out. One had a decent profit; market is likely to be choppy. I would be a buyer if there is some mild strength. These are intraday trades, but I would be a willing buyer on an intraday a minor strength in the Nifty. Q: If you are a buyer, where would you place your stop loss? A: That would depend on how the market opens. Sometimes the levels are not easy to get. Ideally we want to see the market for the first half an hour and the lows that the market marks out will become a stop loss. On some days the levels are evident, but today it is not. _PAGEBREAK_ Q: How would you approach DLF this morning? A: Today could be a choppy day; today, tomorrow, till the big decline is corrected to some extent. However, DLF essentially is a selling opportunity; we should be looking to sell it. Q: How about Tata Motors that had a good week? A: If there is a dip today, I would still buy it because the charts have suggested that it has broken out so it is a buy on dips. Q: How would you trade Suzlon Energy? A: Sell it; do not know how one can sell it because it is not in the Futures & Options (F&O) now. It is at a level where it is not worth considering even an intraday trader could sell it in the cash market. Q: Have you had a look at the charts of Havells India? A: Havells has been a favourite stock for us. We have got the entire upmove. It keeps on coming in the morning list. It is still a buying opportunity and assuming today remains a choppy day, it is a good day to buy it for a short-term trade, couple of days or three days. Q: Would you buy Tata Steel on dips or stay away? A: I would sell it. It is not a stay away. If there is a small rally I would sell into that strength and take a short position in Tata Steel. Options are liquid. I could take position if it is Puts by selling some Calls, but the thrust is on the downside. It is breaking down repeatedly. Q: You would sell Indiabulls Real Estate as well? A: Yes, all real estate stocks are now selling opportunities. The context needs to be kept in mind. I am saying that because suppose the market opens flat and starts rising then there is no need to rush and sell, but at some point in this intraday rally if it comes about, stocks like DLF, Indiabulls Real Estate, Tata Steel should be sold into the strength. Indiabulls Real Estate is also breaking down, it is confirming a distribution pattern. Lower levels are coming during June; one just has to find a good trade location.