Trade long; buy 6000 Calls with inbuilt stop: Sukhani

Yesterday the Sensex closed session up 146.40 points at 19964.03, while the Nifty too had a decent outing ending up 37.35 points at 6039.20. Key equity benchmarks continued to pile on gains, this time on the back on rally in oil marketing stocks after talks of a diesel prices hike.

Sudarshan Sukhani, s2analytics.com, in an interveiw to CNBC-TV18 said if Nifty takes out 6,060 then buy. “In spite of the fact that we are facing significant results today, I would say we can anticipate and buy once the Nifty goes up, “he asserted. Diesel price up by 51 paise/l, petrol cut by 29 paise/l He advises traders to go long with a stop loss in place. He said, “Buy 6000 Calls, so that there is an inbuilt stop in it.” Below is edited transcript of Sukhani’s interview on CNBC-TV18 Q: A word on the index first, big move yesterday? A: Yes it was a big move yesterday, again on the verge of that 6050-6060 strong resistance, which was an earlier high. If we take that out then buying is suggested. In spite of the fact that we are facing significant results today, I would say we can anticipate and buy once the Nifty goes up. There is always a risk that it won't work out and 6000 is your stop level but the trade is on the long side. Buy 6000 Calls so that there is an inbuilt stop in it. Q: You have Essar Oil in your buy list today?
A: Yes Essar Oil is not an active stock but it has been doing the right things, making trading ranges and breaking out. There is a step by step rally in Essar Oil for sometime now. Three days ago, Essar Oil broke out from a trading range and yesterday it built on those gains.
Here is a stock that is telling us that the trend is up. The results are good, market has liked it and probably more momentum is possible today. And then the rub-off from Reliance could also come today itself. So it is a very interesting buy. Q: Housing Development Infrastructure Ltd (HDIL) is your pick from the real estate space?
A: Yes, the stock has now made new highs for this uptrend. Real estate stocks can not actually make lifetime new highs because earlier they had such absurd levels. However, in this current bull market or uptrend, we have to simply track if they are making new highs and HDIL did that.
I think there is more upside here, much more than we imagine. Infact HDIL has been tracked since it crossed Rs 75-80 and it has done well. Q: You have a sell on Bharat Heavy Electricals (BHEL)?
A: BHEL is very disappointing. At Rs 220 it is giving the impression that it is willing to go lower. Q: Any thoughts on Wipro as a stock compared to the rest of the IT bunch?
A: Yes Wipro comes number two in my pecking order after Tata Consultancy Services (TCS). Even after this rally, there is a 10-15 percent possibility of Wipro having another 15 percent of gains. The charts are excellent. Q: What about Voltas, on which you are quite bearish?
A: Voltas has made a similar continuation bearish pattern as that of BHEL. It is a pity because it is now on the verge of breaking out of Rs 100. Once it does that, there is probably waterfall decline coming. So capital goods stocks like BHEL, Voltas, Crompton Greaves are giving a very different picture from what the Nifty is doing.
Voltas is a short selling idea. In spite of the fact that the Nifty is appearing to be cheerful, I think traders will find that some stocks will go down and this is a group that’s likely to do so. Q: What about LIC Housing Finance, you are bearish on that as well?
A: Yes and that’s a surprise because non-banking financial banking companies (NBFCs) have done well but LIC Housing after that really has consolidated. That consolidation has turned into a distribution. Technical traders will find that a bearish head and shoulder pattern at the top of the rally has been made. That’s normally a clear sign that that stock is going through a deep correction, eventually towards Rs 250. Although day trading targets are much more modest but the downside is clear and visible. Q: You have a buy on Sintex Industries?
A: Sintex is in a rising channel. Bear market in Sintex is over. The rising channel suggests that the stock goes up and hits the upper end, then comes down and corrects to the lower one. It just came and corrected to the lower end of the channel. That’s a perfect trade because we are buying at a dip and hoping that if not anything, a small rally also will take it to the upper end.
It is a very nice technical trade. We buy now and hope for that targets that I have given to be touched and hit but protect with a stop loss. The trend is clearly up, so we are buying in an up trending stock.
_PAGEBREAK_ Q: If you do open up a long in the opening what kind of targets would you set for an intraday trader on the index?
A: For the intraday trader the targets would be somewhere around 6,100 and that’s another 30-40 points from where the market may open. For the position trader, the stop was at 5,900 and those stops should now be raised to 5,980. So profits are now being protected and hopefully the markets will keep on going up. Q: We were talking about Exide Industries, technically what is the picture looking like?
A: Technically, it is not a sell but still a buy. Yesterday was a disappointing day; the stock fell and it has come down at support. If the current levels hold that is the support, then I would say that it is still a buy. A rally to Rs 144 can still come about. We’ll see how the market reacts but if it doesn’t push it down that would be a positive for it. Q: What do you see on the chart of Indian Oil Corporation (IOC)?
A: IOC has literally taken off from Rs 250 to Rs 315, 65 points in just seven-eight days that’s a good 30 percent rally. After a 30 percent rally IOC one can take profits. I wouldn’t advice buying. The trend is now up but it is not necessarily a good tactic to buy it now. Q: How would you trade Polaris Financial Technology?
A: I would buy it, there is no doubt about it except that you have to wait for the intraday dips or a well placed trade location. You can't buy Polaris or any other stock after two back to back days of big gains. So the trade is we want to go long but we have to have the patience. Patience is the biggest friend of the trader whether it is buying today or buying on Monday or Tuesday that’s something different. Q: What about Balrampur Chini Mills?
A:  Balrampur Chini from Rs 72has come down to Rs 40. It just has down days. Now there is only one trade here you can sell it. However, it is not in the F&O, so short selling is also not easy. You just stay away from it. Disclosure: I have no holdings in the stocks discussed.