Long Nifty; Bank Nifty may correct: Sukhani

Sudarshan Sukhani, s2analytics.com does not expect the market to head higher from the current levels as it has already rallied 10 percent ahead of the policy. He sees Bank Nifty ripe for a big decline.

"The Nifty still has upside momentum, so people should be long in the Nifty. At present the Nifty levels are very attractive and if one is long then take profits before the policy event,"he said in an interview to CNBC-TV18. He suggested shorting Canara Bank and buying Wipro. Below is the verbatim transcript of his interview on the CNBC-TV18 Q: The market could go either way today and volatility could creep in and maybe one should avoid trading the Nifty before the policy, would you hold that stance? A: The Nifty still has upside momentum, so people should be long in the Nifty. At present the Nifty levels are very attractive and if one is long then take profits before the policy event. The next move for the market will only come after this event is cleared and the market has digested it and there is no sense in anticipation what the markets will do. My worry is we are going into it already with a 10 percent rally already behind us, so it is not easy for the markets to go higher. This kind of momentum generally gets dissipated, For Bank Nifty, we have been suggesting taking Options position for a short trade and that suggestion still remains. If the market finally decides to move an up and push the Bank Nifty even higher then get out of the Options, there is a very minor loss. Otherwise the Bank Nifty is ripe for a big decline. Also read: RBI may be more dovish; 25bps repo cut seen accroding to CNBC-TV18 Poll Q: Canara Bank is your top short today, why? A: Yes, because we have already discussed that private banks need to be shorted and we are now selling in a rising market, at least Canara Bank has not risen, so it is a nice idea. All PSU banks are weak. Canara Bank had a rally and that rally is done with and it’s weakening day after day. So, it is a nice place to be in. Take Options positions rather than Futures because there is no sense in carrying large risks but this is a trade before the event. Q: IT seems to have turned around over last couple of days, is that why you have chosen Wipro? A: Yes that seems to be so because HCL Technologies found support, TCS also did the same. Yesterday Wipro finally went back above the gap that was created because of the split as well as the news; I think there is more upside here. Even if the markets were to do something different we have seen how IT has its own course. The smart decline is over, so expect it to start moving higher and Wipro is an appropriate candidate for buying. Q: You generally don’t advice buying stocks ahead of their numbers but you would still advice a buy into Ambuja Cements today? A: Yes because the charts tell us the stock is likely to rally rather than come back. It has made a fairly bullish pattern, it is going up. We have seen some of the stocks do very well after the numbers that is a risk. So the advantage of taking before the numbers because momentum is already favouring the upside and that is why Ambuja is favoured as buying opportunity. Since it is in the Futures and Options segment, we always have the opportunity of going long in using Options rather than Futures. Q: Jaiprakash Associates is your other pick today? A: Yes the stock has a very attractive chart. It has been in a trading range for the last 7-8 days after a big rally. That range should get resolved on the upside. All the trades must be taken in context; I am assuming that the Nifty will remain choppy but not actually collapses. If the Nifty collapses then some of these trades will not work out. However it is unlikely that Nifty will suddenly take a U-turn. If that has to happen then that will happen with the Bank Nifty. Q: You think Larsen and Toubro could be working its way back to Rs 1600 again? A: Yes. Yesterday L&T broke out of the four day trading range and that momentum should continue. L&T is a buying opportunity and so is BHEL. Both the stocks are very attractive on the long side. Q: JSW Steel is a sell for you, why? A: The stock had a very big decline and then a rally. That rally took an ABC formation which is essentially almost corrective in nature. That uptrend was corrective, that correction is over and it has already started coming down. That downtrend should reassert itself. So remain short in JSW Steel. It is a positional short not just for the day, it will go much lower. _PAGEBREAK_ Q: The Nifty now has flattened out so just below that 6,000 level what would be the approach from now until the policy? A: We are going with long positions in the Nifty. Our stop loss is now 5950 on a closing basis. If it is closing below this we will just get out. Before the event, I don’t think there is a trade in the Nifty. Just watch the event. Q: What about a stock like Mahindra and Mahindra (M&M)? How would you approach that today? A: One can buy it but not today, especially after yesterday’s run up and it being a rate sensitive. We don’t want to enter into autos today, but M&M should be a buying opportunity after a sharp correction. Q: What about Reliance? Do you think it can play a supportive role? A: Yes, I think so. It did nothing; it is now giving signs of life which is why I am not so bearish on the Nifty. So, Nifty might get support from Reliance, Bharti Airtel and maybe IT. Q: What about Reliance Communication? Do you see more momentum above Rs 105? A: Yes, I do see more momentum. This sharp rally is not a bear market rally, it is the change of trend but we don’t want to buy it now. This will also consolidate. The best location will be when it stops going up and consolidates. Q: Bharti Airtel has some fundamental news but technically how do you approach that stock? A: Bharti Airtel is a buy on dips and what we saw was a dip. I would be a buyer here. Our stop loss or support level is at Rs 285-Rs 290 and till Bharti trades above it we want to be long.