Nifty to fall further; sell in May and go away: Sukhani

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

See Nifty in 6080-6120 next week; buy J&K Bank: Baliga Below is the verbatim transcript of Sukhani's interview with CNBC-TV18. Q: How do you approach trade this morning on the index? A: Market has different undercurrents so the intermediate term for the market is down. We have gone through a process of distribution or maybe we are still going through it. However, the final outcome of that process will be lower levels on the Nifty. That is for the next three months and we are also in May; this time the 'sell in May and go away' should work out. Therefore, seasonally and on the charts we are looking at lower levels for the next three-four months, but we are also in expiry, we are also short-term traders. Today we have had a very decent decline and for one-and-a-half day now we have been going in a narrow trading range. I would be open to take a long position for the day or maybe even for a couple of days. So, there are two different undercurrents eventually a lower, but immediately very open on taking a long position.  Q: You have picked Godrej Industries on long side? A: After a strong rally Godrej went through a correction and this correction has now stopped almost exactly at a strong support level. If the market is choppy or if market does not have another waterfall decline then this support should hold. In that case it is a good opportunity to go long today and even carry position if it works out well.    Q: You have picked IndusInd Bank today from the banking lot? A: Yes, it is a short sell. IndusInd Bank is now going through a process of distribution. The rally has been very smart and it does not go on for ever. It is not easy to short sell a stock as strong as IndusInd so traders should be little careful in the sense once a sign of weakness is seen intraday then it is a short sell because for the last three-four days IndusInd's chart suggests that higher levels are not getting sustained, every time it tries to go up there is a wave of selling coming in. So, this is just on the brink of a decline.   Disclosure: Sudarshan Sukhani has no holdings in the stocks discussed.  _PAGEBREAK_ Q: You are buying Dr Reddys Laboratories this morning? A: Dr Reddy's has gone through a correction of some kind. The stock has been making lifetime new highs and then everything corrects. On Friday Dr Reddy's went through a very narrow range and that narrow range should be resolved on the upside today; if it is not resolved, if it comes down on the downside then ignore it. I would not sell Dr Reddy's. It is a buying opportunity. If it crosses Friday's highs then go long in it, it means it is well on way to make lifetime new highs again. Q: You are short on Sterlite Industries this morning? A: Yes, with some regret. Sterlite has always been a favourite and it keeps on coming down. Sterlite's small three day rally has gone into a strong resistance, it is running into that resistance and that resistance should now hold. It is very unlikely that we will see big gains in Sterlite. So, the trade here is that this is a sell on a rally trade, maintain stop losses, in case the market or the stock does turnaround then get out. We have a tight stop loss here. If not, we are selling almost at the highs of a small rally.  Q: You have sell call on McLeod Russel? A: McLeod Russel had a big down day in April and then it spent one-and-a-half month after that sideways. It has not been able to recover from that one down day. That suggests that there is no buying pressure because one day’s decline and 35 days of trading range have not matched each other. It is now on the verge of a new breakdown. If that happens and I think it should, it is looking at Rs 280 or even Rs 270 eventually, not an intraday target, but for position trader it is a sell and wait. Q: You have a buy on Adani Power? A: I like Adani Power's stock. It was in a trading range, building a base and then a sustained breakout from that. I am not worried about the fundamental as to why it is going up or whether it is justified or not. It is a futile exercise. After a big gain Adani Power corrected mildly and on Friday it closed cheerfully. That suggests that a shallow correction is over and if it is then it is going up, not necessarily with the same big gains, but certainly enough for day traders to take a long position. It is a buy on dips opportunity for a strong stock. Q: Your view on index and whether you want to initiate trade today? A: Yes, intraday trades are probably in the offing. We have been building a small base over the last one-and-a-half day. Therefore, I would be a buyer in the index today. This is an intraday trade. It does not change the overall view but today look to be on the long side. _PAGEBREAK_ Q: With what kind of targets? A: My targets would be above 6,050 for the Nifty and if it doesn’t come about in a day, if it closes strong then there is a case to carry it forward.  Q: Any signs that Tata Steel might have formed a bottom? A: It is certainly doing the right things, but as of now I do not think it can be bought into. The trade here is to sell at higher levels and not at current levels, but a rally should be sold into. Q: How would you trade Sun Pharmaceutical Industries? A: Sun Pharma is a buying opportunity. The dip that we saw on Friday should be bought into. Strong stocks have to be taken only one side buying. Q: How would you trade Hexaware Technologies? A: I would avoid it and if another one day of a rally then we will sell it. One day of a rally versus many-many days of decline. Therefore, it is not a buy. Q: Did you catch the move on Fortis Healthcare on Friday? A: Yes, I did. It collapsed from all its support levels. Therefore, Fortis is a sell but it is not in the Futures and Options (F&O) side. I do not think one can short sell it, but it is certainly not a buy. Q: Have you been tracking the moves on the currency and after last week what kind of targets are you looking for on the rupee? A: I am gratified that the rupee is doing what the charts have been suggesting. We are looking at 57/USD as an immediate target. We are upbeat on dollar rather bearish on the rupee and 57/USD is an immediate target and I suspect we will eventually end up with more than 60/USD.