Sukhani's warning: Do not time market and go short

In an interview to CNBC-TV18, Sudarshan Sukhani of s2analytics.com advises long-term investors to build on their portfolios by cashing in. He says, "This is not time to buy."

He also warns investors against timing the market and going short. "I hope nobody does it, because that is a warning that’s important," he says.

Also read: India's July-Sept GDP growth seen at 5.4%

Below is the edited copy of Sukhani's interview.

Q: We have been talking about this big breakout over the last two days. What kind of targets would the Nifty trade or should Nifty traders set? A: The Nifty has moved up including what is going to be today’s gap 250 points. It is as good as it comes. This is now the time to take profits and go lie back and take some rest. The markets can see some gains today, but I would assume that these gains are now becoming mature. In all fairness, after such a big move, market will chop around, consolidate and then the next steps should be taken after the process of rest is over. So, today I would advice those who are long, should now build on their portfolios by cashing in. This is not time to buy. Intraday trades can still be taken on the long side. Only when you see these big intraday dips or consolidations, there are points to be made on the upside. However, much more important is not to make the mistake of timing this market and going short. I hope nobody does it, because that is a warning that’s important. Q: You have a buy on LIC Housing Finance from the midcap basket? A: LIC Housing has made a very good pattern. It went through a correction, then went through a trading range and is now breaking out of it. When the market or the broad index goes up, it is not necessary that all stocks will participate simultaneously. Most of them participate but that is before or after or during the period when the Nifty is moving up. So, we are now talking about stocks that are likely to move up or participate in the rally even if the Nifty goes through a choppy period or takes some rest. LIC is going to be one of them. The stock is now willing and ready for a major upmove. Q: What is the rationale behind the buy on Canara Bank? A: Canara Bank is a dream chart. For two-three days, I have been explaining that PSU banks need to be focused upon because the big gains will not come in private sector banks, they will come in selected PSU banks. Canara Bank is one of those where we need to focus on a big upmove coming. Over last 2.5 months Canara Bank has been a trading range for Rs 20-25. Just like the Nifty as narrow and probably narrower. It is now breaking out. PSU banks will do their own thing while the markets probably don’t activate or remain active and Canara Bank is one of the best of the lot. _PAGEBREAK_ Q: Do you have a sells on Bharat Heavy Electricals Limited (BHEL)? A: The sells have to come mainly to keep my views balanced. It is easy to go on one side and then keep on thinking this is not going to end. But BHEL is a very disappointing stock. A share that actually comes down successively on days when the Nifty is literally flying has some problems with. There is a short selling idea here. It is possible to go and short sell in a choppy market and we will get those opportunities in the next few days. BHEL will remain one of these selling ideas. Q: Are you selling Tech Mahindra? A: Tech Mahindra suddenly turned around, made a small distribution pattern and is now going through that steady down move of lower highs, lower lows. It made an up-sloping flag, a very bearish pattern and then broke down from that. So, Tech Mahindra is almost a certain sell, just like BHEL. Tech Mahindra is giving an impression that something is going wrong here. Q: Why is Godrej Industries on your buy list? A: Godrej has come consistently in the buy list. It went through a mild correction and has now resumed its upmove. It is likely to make new highs and then keep on going further. Stocks that go through small corrections actually give us opportunities to enter at reasonable or lower levels, which is what Godrej has done. I would be a buyer here. I am not so worried about the fact that the Nifty may or may not move because individual stocks will move. Q: What are your views on Adani Power? A: Adani Power is one of those stocks that have done their bit on the bearish side. A small rally has already started. It is not that Adani is suddenly moving up. It is in a small uptrend and that uptrend is likely to gain momentum. Power stocks in general are showing signs of life and that will happen because these cycles of sector rotation will continue. So, generally power stocks are good and Adani probably is a better opportunity among that. Q: A word on the Nifty and trade this morning? A: The Nifty has already done its bit. It has rallied significantly for the last two days. As we see, the market is ready to open up, there will be some gains on the opening but beyond that the markets are likely to turn choppy. So, the trade is, if you have long positions and you are a short-term trader then build on your gains and take profits. These opportunities will come again. If you are a position trader hold on. For intraday trader there is a buy on dips and buy on consolidation opportunity because be on the long side and there will be small profits on the long side again today. _PAGEBREAK_ Q: Some of the infrastructure stocks did quite well yesterday. What's the chart of IRB Infra looking like? A: IRB Infra is a buy. It fell on the back of news and after that decline, it went into a consolidation, which means that there was a strong support in the Rs 100-120 area. That area has held on and it has now broken out of that consolidation on the upside which means that the decline is over and a new uptrend may well be starting. We are not sure but there is a trade on the long side because if this is a new uptrend we are buying almost at the lows. Q: What about IndusInd Bank? A: IndusInd Bank has gone up but we must understand nothing can go up forever. I have been very upbeat on private sector banks but that story now seems to be coming to a temporary conclusion. So, theoretically IndusInd is a buy but in practice I would be very afraid of buying. The risk is far more than the reward. This is the time to take profits. You have to wait for a small correction or a consolidation or a dip to re-enter in this stock. It is much better to get out, take profits and wait. Q: What did you make of the move in PFC yesterday? A: I would buy PFC. What PFC has done is that it has gone through a dip. That dip did not actually go further than Rs 170. It had created a double bottom and it is now rallying. The double bottom is not confirmed but it could well be confirmed given the conducive environment in the market. So, PFC is a buy. If the double bottom does get confirmed we are looking at significantly higher levels. So, there is a small risk and a potentially large reward. So, I would be a buyer here. Q: Has Jet Airways hit a bit of a ceiling at these levels? A: Jet has done its bit. Jet Airways was located when it was just breaking out at Rs 350-370. Since then we have been saying go and buy and it has done what it should have done. Now after this sharp sudden rally, there is no sense in going in long. These small movements on the downside we have seen are not dips, they are not a correction, they are nothing. We need a significantly larger correction in Jet Airways to buy or a much larger consolidation. So at this point theoretically Jet Airways is a buy but tactically in real practice I would avoid it completely.