Nifty to break 5730; hold long positions: Sukhani

Technical analyst Sudarshan Sukhani of s2analytics.com sees a 90 percent chance of the Nifty breaking out of the 5,730 levels and crossing 5,800 levels ahead. The Nifty rose 20 points on Tuesday and closed at 5,724 levels helped by banking and financials stocks.

He suggested traders to remain positioned with long positions. "To keep a small hedge, they should have some 5,700 puts which are available at much lower cost," he added. Below is the edited script of his interview with CNBC-TV18’s Udayan Mukherjee and Sonia Shenoy. Q: There is lot of excitement but as a trader, purely on what you have seen so far, how are you going to approach the trading day? A: We will ignore the news. I would say that we are on the verge of breaking out from 5,730, which is the level we watched for four weeks now. It is always difficult to give a sure prophecy but there is a 90 percent chance that we will breakout on the upside whether it happens in the morning, afternoon, tomorrow or next week. If that is so, then traders should remain positioned with long positions. Just to keep a small hedge, they should be having some 5,700 Puts, which are available at much lower cost. The view is that we are breaking out and we should be crossing 5,800 and we will see from there. Q: Since you have more buys in the list today, we will start with ICICI Bank from the banking pack? A: If the Nifty is going to go up 2-3 percent then the banks are going to participate that is large private sector banks, which are also heavyweights. ICICI Bank has an excellent chart and it has been in a trading range for one and a half months. So together with the Nifty’s breakout, it is reasonable to assume that ICICI will also breakout on the upside. We could see some choppiness since news brings choppiness but I am positioned on the long side. It would be a good idea to buy calls in ICICI Bank and just wait patiently. Q: If you have a long bias in initial trade, where would you place your stop loss on the Nifty? A: If I have a long bias in initial trade which I have, my stop loss for the Nifty is at 5,650. But there is a warning here; a choppy market can see sudden jerks on the downside. So, even this stop loss needs to be used with caution. Sometimes the Nifty can go 30-50 points down and rally in one hour, which is a possibility. So the stop loss should be used with discretion. _PAGEBREAK_ Q: Hexaware Technologies is another buy for you from the midcap IT space? A: Yes, Hexaware had become a short sell and it fell from Rs 140 to Rs 110. Now it has been in a trading range and trading ranges are always attractive opportunities. It has just pushed above that range yesterday. It is difficult to say if the decline is over but the chart suggests at least some kind of a rally is beginning. For all we know this could be the beginning of a new uptrend. So it is worth buying into. Q: Where would you place your target on Tech Mahindra, which is a buy for you? A: Tech Mahindra comes in the same category as ICICI Bank. It rallied then it went into a trading range. After rallies markets will always pause, which is why we are not big fans of buying after big rallies. So wait patiently and you will get good prices. The consolidation is now breaking on the upside. So for Tech Mahindra, I am very sanguine that we will see much better prices and those who are bullish on Mahindra Satyam would be well advised to buy Tech Mahindra rather than Mahindra Satyam because the stock is going places. Q: UCO Bank is a sell for you, why? A: Yes, UCO Bank was a little confusing. My sense was that it is an out performer. It went up, then it suddenly fell down. Finally, yesterday it has broken support level. So now UCO Bank goes into that category of PSU banks, which are short selling opportunities together with Punjab National Bank (PNB), Bank of Baroda (BoB) and Vijaya Bank. So UCO Bank is a short sell. Keeping in view the fact that the markets are slightly on the cheerful side, short selling should be subdued and have small targets. Q: You have a buy on Ambuja Cements today; you were telling us about how cement looks good, what is the target there? A: Ambuja is a buying opportunity. My eventual target for Ambuja is Rs 250 and that is not the immediate day trading target, which will flash on the screen. If somebody is willing to maintain a position in Ambuja then he or she is looking at a 25 percent gain. So this is also an investment or a positional call. Cement is doing very well. The chart suggests big thrusts are coming on the upside. Q: What are your thoughts on the Bank Nifty? Where are the charts headed from here on and how would you approach some of these big ticket banking names? A: Bank Nifty itself broke out of a trading range yesterday and the Nifty is now on the verge of doing so, but the Bank Nifty did it in the last minutes of trading. So the Bank Nifty was an outperformer and I think that will continue today. My own view is that if there is a sharp correction intraday in the Nifty then I would be a buyer and add to my long positions. This is not a market to go short unless a catastrophe happens in which case you will just run for protection. The other index we should talk about is CNX-IT, which is now bottoming out and no matter what happens in the US eventually, I think there is a trade in the index itself. _PAGEBREAK_ Q: For somebody who is not feeling brave enough to take an outright trading position on the Futures, what would be a slightly more guarded kind of way to express its trading opinion? A: Even I am not brave enough to take those outright Futures position. So that is a very fair question. The trade here is to buy 5,700 Calls that restricts your losses to the amount you paid as premium and ensures that if this market is taking off then we participate all the way through. That is the ideal way to trade this market. Q: How about the dollar-rupee, how you see that move? A: Today in the first 10-15 minutes, it retreated a bit but I eventually see it reaching 57. Q: The two stocks which are announcing results today are Tata Motors and Bharti Airtel, how do they look technically? A: Bharti looks very nice on the charts. It is willing to go up another 30 points and cross Rs 300. So whatever happens intraday should be ignored and opportunities should be taken to go long in it. Tata Motors is a bit more difficult to suggest because sometimes Tata Motors reacts in strange ways to numbers. So that is a stock I would prefer to avoid when anything goes on with it.