Mkt giving confusing signals; Nifty to break 5970: Sukhani

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

Pick midcap IT now; bullish on Divis, Sun Pharma: HDFC Sec Below is the verbatim transcript of Sukhani's interview with CNBC-TV18. Q: How would you approach the index on expiry day? A: Sometimes the market gets confused, at least in the short-term and we are going through that period now. Yesterday we were upbeat, it didn’t work out. Today we are confused. The clear visible picture is that this market is in a trading range. We will round it off to say roughly between 6,000 and 6,200 and inside there are smaller resistances and supports. So, market is not going to give big move, it is not going to allow us to make money either. If I understand it then I would be better-off. Today's market action is completely confusing. It is difficult to say -- we are talking about the short-term view -- it is difficult to say whether we are going to rally in spite of the global weakness, which is possible given the Futures and options (F&O) expiry today and the unusual action that takes place, maybe we are going down. However, I have only two clear perceptions as of now; we are leaving aside today, which is not easy to determine. So, first point is this market is distributing, eventually we will break 5,970 and go lower and second, trading inside this trading zone is best done intraday. Q: Pharmaceuticals have done well over the last couple of days again after a correction. You have picked Glenmark Pharma from that list? A: Yes, Glenmark has an excellent chart; it had a base, a sharp rally and then a small decline. That decline takes the shape of a technical flag. It is breaking out of that flag suggesting that much higher levels are coming. Glenmark is not a day trading opportunity. We have it here because today there are no day trading opportunities, almost none. Glenmark is a position trade. Buy it now, have the patience and one will see it, not only do well in the next few days but also over the next few weeks. Nifty to see 10% correction before elections: Jefferies Q: You have a buy call on MphasiS? A: MphasiS had a rally and after that rally it went through a consolidation. That consolidation could be breaking out on the upside. The list does not contain any bluechips; any index heavyweights because the sense of confusion prevailing in the Nifty is now coming to the heavyweights. MphasiS is different. I would like to buy it. It is not a day trade but perhaps a swing trade; carry it for a couple of days, through next week it could work out well.   Q: You have a long call on Wipro this morning? A: Wipro is a higher quality long. It has been consolidating in a very narrow range as if it has given up, it is not going to go down and it is not going to go up. However, good stocks do not give up, they eventually take a direction. Since IT is broadly bullish, I would expect Wipro to give a breakout. Even today it is possible. Today also the slightest sign of strength, traders should consider going long in it and if it works out, carryon and those who are not day trading, buy Options here. Disclosure: Sudarshan Sukhani has no holdings in the stocks discussed. _PAGEBREAK_ Q: You are long on Jubilant Foodworks today? A: Jubilant Foodworks is making a convoluted but visible head and shoulder, it is a bullish pattern. If this is going to work out then Jubilant is a high beta stock, it could do well. Therefore, take the trade today; it could even do well today; a lot of things could happen on F&O and if it is not going down then carry it forward.  Q: You have a sell on Zee Entertainment? A: Zee is distributing; for the last 10-12 days it is giving a sense of price action but not doing anything. It is doing what the Nifty is doing.  I would assume that Zee is making an intermediate top; it is not easy to call a top anyway, but the trade here is to be short, preferably buy Puts or sell Calls or if one is aggressive then sell Futures and wait patiently for decline. I think that decline will come. Q: Grasim Industries is in your sell list? A: Grasim has made a confirmed bearish head and shoulder pattern and is now breaking down. It is a nice positional trade. Sell Futures, keep a stop loss, wait patiently, the targets should come. It is attractive for the day trader as well for the day. If the market opens weaker, sell Grasim and wait for some gains. Q: Your views on the index and if you do get this kind of softness, what kind of trading approach should somebody playing the Nifty take? A: It is going to be difficult today so intraday trading is not easy. The approach one should take is to look for extremes today. If the Nifty corrects 40 points from the opening price is an opportunity, which suggests that at least intraday there will be a bounce back and the same applies on the reverse if during the process of adjustment there is a 30-40 point rally and that rally should be sold into because the reversion to mean will inevitably occur. It is just a day trading strategy. Ideally we want to step aside; the 6,000-6,200 levels should eventually break.  Q: Do you think in the early part of the June series the Nifty has a chance of piercing through 6,220 and going a whole lot higher or do you think that would be an unlikely outcome? A: That would be very remote and extremely unlikely outcome. The market can do everything but I would be surprised if that happens; anything can happen. _PAGEBREAK_ Q: Is there a chance of the Bank Nifty now catching up on its underperformance of the May series or is that showing you signs that any drop on the Nifty will be led by it? A: Any drop in the Nifty is likely to be led by it because the Bank Nifty yesterday did what the Nifty could do today or tomorrow, which means it broke support levels. So, the Bank Nifty is already suggesting that the tops in individual stocks are being made. This process of distribution is always choppy, it is not clean. However, the Bank Nifty is giving a clear indication that it is going down. Q: What kind of indications are you getting from a stock like Jaiprakash Associates? It had a brief surge of momentum but has started losing ground again? A: It has lost all its ground and it is a big disappointment. I am surprised that a chart can turn so easy and quickly. JP Associates gave a sense of accumulation and a breakout. That suggests that it is in a bull market. It has given up all its gain. I do not know why, but the charts suggest it is no longer in a bull market and it should be avoided completely.  Q: If you were to look at three-four key heavyweights on the index, which one would you say looks most vulnerable technically, the one most likely to pull the market lower? A: The entire banking space looks most vulnerable, they are at the top of their charts, they have run up far more and they are now giving clear signs of falling apart. The second stock with some regret is Reliance Industries. It is not doing anything. The 40 point move that one is seeing and rejoicing is nothing.