Sudarshan Sukhani of s2analytics.com said that market has rallied and that strong rally suggests that momentum is intact on the upside.
Sudarshan Sukhani of s2analytics.com believes the strong market rally suggests that momentum is intact on the upside.
"So far as 5,950 hold, we are willing to take long and short positions both. Market could be choppy; that is our threshold for abandoning short positions otherwise any rally in the market take short positions and on sharp dips cover the short positions and also consider buying," he said in an interview to CNBC-TV18.
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Below is the verbatim transcript of Sukhani's interview with CNBC-TV18.
Q: The market has rallied strongly. Would you advise some profit taking today?
A: Market has rallied strongly and that strong rally suggests that momentum is intact on the upside. We had a weak day on Friday but that needs to be understood in context that market was up for many days, There was a big bang settlement day on Thursday and the new settlement inevitably starts subdue. So Friday was just one day off. Will Friday’s weakness persist? If it does then a much larger picture will emerge, which will be that 5,900-5,950 is resistance and market have stopped that resistance, so that is the picture for May.
Will we stay below 5,950 or will we cross it. Once we cross that threshold another 100 or 150 points of a rally is possible. The view then is so far as 5,950 hold we will be willing to take long and short positions both. Market could be choppy that is our threshold for abandoning short positions otherwise any rally in the market take short positions and on sharp dips cover the short positions and also consider buying. Keep volumes low because this buying at support and selling at resistance is not easy to do.
Q: How are you feeling about the Bank Nifty because Friday looked quite tricky for some of the bank names? Would you be more bearish on the Bank Nifty than the Nifty?
A: In my opinion, the Bank Nifty is a sure sell, which is why I am little uncertain about the Nifty. The Bank Nifty has rallied, private sector went through the roof with the stock prices and now the rally has come just in front of the news, the Reserve Bank of India’s meeting. So, all the expectation has been factored in the prices therefore I am very careful of going long in the Bank Nifty, for me it an excellent short selling idea. It is possible even to get stopped out once or twice as the market chop out. However, I would still be a seller in the Bank Nifty as well as in the private sector bank because they are the largest component of the bank.
Q: How would you approach HCL Technologies that was the big loser last week, more than 7 percent?
A: All IT stocks are sell, not just HCL Tech, I would be a seller here, even a short seller and certainly I would avoid buying on any kind of dip because that would be a like a falling knife's trade because these are just beginning their intermediate downtrend.
HCL Tech is breaking support levels that is never good news so the trade is to either step away or to take new position and probably a short position, intraday at least for a couple of days could make money.
Disclosure: Sudarshan Sukhani has no holdings in the stocks discussed.
Q: Would you sell Unitech?
A: Unitech is a sell. There was a small rally that rally stopped at resistance, it is turned down now, for the last two days it has been giving us weak signs closing lower. I think the small bear market rally in Unitech is done and over and one should be looking to short it. As usual short selling should be done only by professional traders but that’s a different issue. The trade for Unitech is to be on the side of the sell.
Q: It is going to be a flat day, but what is your view?
A: Today's Nifty trading is not going to be easy, the idea is to sell at resistance and buy at support, these levels will be determined by the first one hour of trading so once we identify the highs and the lows, they become our points for taking small, scalping profits on either sides. If one of the levels breaks decisively then we can see a strong trend and I would be willing to keep a short position if a downtrend emerges and of course keep on buying if the market breaks the first hour highs. So, all in all a choppy day is likely but savvy traders should be able to make money.
Q: Maruti Suzuki had a big move on Friday, how is that chart looking?
A: Maruti has an excellent chart, I would be a buyer in Maruti except that after big gains do not buy because that is the question of tactics, so wait patiently for a correction or an intraday dip and for intraday traders even intraday consolidations in Maruti are worth buying into. The stock is in an uptrend, such uptrends will persist.
Q: How would you trade Bharti Airtel today?
A: Bharti Airtel is giving a long-term buying opportunity. The stock seems to have bottomed out, it built a small trading range and it is broken out of that range so it is a buy. Like Maruti, it is a buying opportunity on every intraday consolidation, stay on the long side here. If the Nifty is to go up or remain stable, Bharti is likely to be a big contributor.
Q: You are recommending United Phosphorus on buy side.
A: United Phosphorus has a very attractive chart, but the problem with United Phosphorus is something else, it never rewards; it gives these bullish patterns and somehow always the patterns fizzle out, sometime they do not meet pattern targets, sometimes they meet the pattern targets but immediately retreat, which means they never begin a sustained upmove so the stock price has shown us that it is building a base. It has broken out of that base, it is very difficult for me to say whether this trend will be sustained and for this reason I would prefer to wait for this stock to show more strength and then buy because these earlier moves has proved to be illusionary, they just do not work out.
Q: Siemens had huge crack on Friday post horror earnings?
A: Siemens is a sell; it always was on my list. It is a stock that is far more hyped than its worth on the charts, the chart have shown big moves and then significantly equally large downtrends. I would be comfortable selling it, there is no doubt about it.