Be careful of building new long positions today: Sukhani

In an interview to CNBC-TV18 technical analyst, Sudarshan Sukhani of s2analytics.com shared his reading and outlook on the market ahead of Reserve Bank of India's (RBI) credit policy.

Mkt focused on RBI commentary, not SC or PMO: Dipan Mehta Below is the verbatim transcript of Sukhani's interview with CNBC-TV18. Q: How would you approach the Nifty, we have some subdued global cues this morning, how would you take that into consideration? A: So far the Nifty has given us an intermediate uptrend, which is intact. We are keeping our stop losses at 5,850. This should be revised soon enough after tomorrow’s event of credit policy. However, as of now the Nifty needs to close below this level to tell us that the trend has changed, very unlikely it will happen today which means that we should be on the long side. The market is now in a strong resistance area so day traders can also take short positions if they are smart enough to take 20-30 points on the downside. The very fact that we are considering short positions tells us that market is reaching a distribution area. This is not easy, distribution always is a process not an event. It could take some time. I would be very careful of building new long positions now on a carry forward basis. Intraday try to buy dips, try to sell rallies, get whatever you can but beyond that no major commitments in the Nifty. Q: For some of these midcaps, you continue to be a bit bearish, names like McLeod Russel (India) for example? A: McLeod Russel (India) has been in a downtrend for sometime now. We have caught this on the short side earlier also. As the Nifty was making a big move, McLeod Russel (India) made a very minor rally, which is a bear rally. It was a flag and then day before it broke down from that flag. Clearly, the downtrend is absolutely intact. It should now go below Rs 300 eventually. So, McLeod Russel (India) is relatively an easy shorting target. Q: Opto Circuits India is a name that you are selling? A: Yes, we have been selling Opto Circuits India since Rs 200. It came all the way to Rs 40. There was a sharp rally. From Rs 40 to Rs 60 was a 50 percent gain in percentage terms. That bear market rally is over. Opto Circuits India went into a trading area, it has broken down from the trading zone, again the downtrend is resumed. So for an intermediate position trader, a test of Rs 40 is quite likely. I would not be surprised but for short-term traders, take a short side trade, get whatever you can. Disclosures: I do not have holdings in the stocks discussed. _PAGEBREAK_ Q: We just heard a fundamental buy call on Petronet LNG, you would buy it technically as well? A: Yes, Petronet LNG has a strong support area in Rs 125-130 zone. It is holding on to support. This support zones are only numbers. If the price falls through it then that is the end of it. Luckily for Petronet LNG it has not done that. We saw a deep, sharp, a big correction in Petronet LNG, this maybe the first sign that the correction is over. It is not enough for an intermediate trade but for short-term traders, that small base building and a breakout above that base justifies going long because it is a good stock to be in. Q: Bharat Heavy Electricals Ltd (BHEL) has had a good run for the last couple of weeks. You see more traction there? A: Yes, in fact we caught BHEL when it was in the process of making a double bottom, not very large but it was there. It rallied from Rs 178 to Rs 193. For the last four days, BHEL is in a very narrow trading range. I am assuming this trading range will break on the upside because the patterns are fairly bullish. If that is so, we are buying BHEL today almost at the point of breakout, which is a very nice place to be in. It is worth taking a trade on the long side. If it does not then we have to understand that we will get stopped out or we can get out early. If it does not work in a couple of days, it will not work. So one should have a two days timeframe and go for it. Q: Zee Entertainment is another stock that you are quite bullish on this morning? A: Yes, Zee Entertainment was in a correction. It went all the way to Rs 210 but evidently that was a correction, not a downtrend. Correction is over. We have seen Zee Entertainment rally. Day before it rallied significantly. It has not yet reached its earlier highs. So, the first step for Zee Entertainment should be to go and test those highs at Rs 240-242. That gives us a fair amount of headroom on the upside. If it starts making lifetime new highs from there, it will become even more bullish. So, we do not worry about valuations. We just say charts are very conducive, go long in Zee Entertainment. Q: Finally Aditya Birla Nuvo from the largecap space? A: Yes, Aditya Birla Nuvo has an unusual chart. It is doing something that Reliance Communications (RCOM) was doing. It made three big range days on the upside. It broke out from a bear trend and then started moving up in literally jumps. Obviously, it is not RCOM. I am assuming there is nothing that supports that fundamental news also. The charts are very nice. We should be long here, we should not worry that it has rallied a bit. There is something going on here that could take it much higher. So, take a position to swing trade, take a day trade on the long side. _PAGEBREAK_ Q: How would you approach something like Idea Cellular now? A: I would still be a buyer. We have to talk about the Nifty because the Nifty is giving a sign of distribution. So buying should be done very carefully, not stock specific today. One should just follow the Nifty. If it is going down, do not buy anything. Idea Cellular is a buy but I would stay away from it, only buy it on a dip. Q: Would you buy anything like HCL Technologies from the IT space? A: Yes. On the charts, it is a buy. It has come down to very strong support. Same reason, today and tomorrow are not good days to take any long or short positions. Yes, it is a buy theoretically. Q: How do you read infrastructure names like GMR Infrastructure, despite a strong market on Wednesday, these stocks started to correct? A: That is a sell. There is no confusion on it. It made a double top, confirmed that double top, it is a selling opportunity, significant downside is available here. So, I would take that trade. Q: How about something like Jaiprakash Associates? A: That is a buying opportunity. A small decline or maybe a decline that continues today should give us a level where we want to buy it. JP Associates is bottoming out. It may not, that is a different story but as of now it is attractive buy. Q: Has the time come to take profits in IndusInd Bank? A: Absolutely. The time has come to take profits and if the trader is savvy and aggressive, also build short positions by buying Puts and selling Calls. Do not sell futures. I think traders can do that with the Bank Nifty also, take a bearish position till the news, if it does not work out in options, you will have a small loss. Q: Give us a quick word on Bharti Airtel and where the key supports are because that might be very active this morning? A: It is Rs 285 to Rs 290. If that breaks, it will be a very tragic position because then the bull market is over.