Mkt trend up; book profit on existing positions: Sukhani

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

"The short-term trend is up; traders should be positioned on the long side in the market. However, enter fresh positions only on either correction or a dip or when the market or individual stocks consolidate," he suggested. Prefer Bank Nifty to banks; Infy a trading bet: Dimensions Below is the verbatim transcript of Sukhani's interview with CNBC-TV18. Q: Last trading day before we get into expiry, how would you approach the Nifty this morning? Is there still strength in the up move? A: We have strong momentum and I assume that there is strength in the up move, but that strength may come after a correction, after a consolidation or it may continue. That is a question, which is not easy to answer. The short-term trend is up; traders should be positioned on the long side in the market. However, enter fresh positions only on either correction or a dip or when the market or individual stocks consolidate. There is no need now to run after breakouts. These breakouts may be the final attempt to rally before market stay quiet. Therefore, broadly trend is up, wait for new entries, if you have existing positions consider taking some profits. Q: Just as a follow up question, would you have the same approach towards banks as well after the huge run up that they have seen, not chased them too much today? A: I will have the approach; in fact, the conviction on banks stalling now is stronger. That does not mean the bank will stop rising just because we are discussing it. It means traders should be aware that the risks have increased and the banks have given fantastic rewards over the last seven days. It is much wiser to collect those rewards and step aside. Most banks are only now buying on dips or buying on consolidation opportunities. Q: We were talking about some cautious comments on IT. You have a sell call on HCL Technologies today? A: A stock that was rallying relentlessly, as good a rally in IT as possible has suddenly cracked. It fell for three days, stalled and then broke down from a strong support level. That suggests that an intermediate top has been made in HCL Tech. HCL Tech is now a short sell. There are two ways of looking at it. One is that in a rising market, one does not have to sell anything. Second, one can step aside. If one has long positions, step aside, do not buy it. Of course aggressive traders can actually go short in it. Disclosure: Sudarshan Sukhani has no holdings in the stocks discussed. _PAGEBREAK_ Q: The other space that seems to be cracking is cement and you have got a short on India Cement this morning. A: Cement is cracking. In fact UltraTech Cement has probably a better chart in the sense that a dip there is a buying opportunity but most other cement companies have charts that suggests lower levels are coming. India Cement is in a trading range. It is in the middle of that range and now coming on the downside, which means strong support comes only at Rs 78. So, there is a tradable opportunity. From Rs 83 to Rs 78 is a good move that short-term traders can take on the sell side. If it cracks Rs 78, then of course, a significantly lower trend will start but that’s later. Q: Let's switch to the more upbeat calls. You are long on Godrej Industries today. A: Yes, Godrej has come earlier in our buy list. It was in some kind of a bear market like most of the Nifty stocks. It rallied after a small basing pattern, not very large. Yesterday it showed signs of very strong surging momentum. It made 50 day new highs; these new highs usually should be bought into. Therefore, this is a swing trade. It is just a couple of days, do not suddenly become a long-term investor. However, there is more momentum here and any opportunity after first 15-20 minutes of trade to go long should be used. Q: You would buy Hero MotoCorp today? A: We have already seen that it was a virtual bear market in Hero MotoCorp. It has been stalling for the last ten days and then building a small trading range. It has broken out of that range. That suggests it is a blue chip stock, market is not willing to discount it any further, at least not now. The breakout should be bought into. Results can do anything and one has already seen that, but there is still potential if one is using Options rather than Futures. I think being on the long side is wise because the breakout suggests that smart money is buying. Q: What about your buy on Hindalco Industries. Do you see metals coming out of a bear market after a long time? A: It is too early to say if the bear market is finished, but certainly metals are giving signs that they are prepared to participate in the ongoing rally that one is seeing in the broad market. Hindalco has broken out of a trading range and that range took some time to develop. So, it is not narrow, it is wide enough to be tradable. That breakout is worth buying into. When metal starts taking a direction, they are very high beta instruments, high beta sectors. Therefore, even a rally could give a lot of headroom before it stalls, before it reaches a target. I would be a buyer in Hindalco. Q: How are you trading NTPC? A: NTPC is a breakout candidate. NTPC is making a small base, it is coming out it. It is similar to Hindalco although Hindalco has better chart.  The important point is that these are news driven stocks so traders should be aware that if the market suddenly react to any adverse news, it is not expected but anything then they have to get out. Q: You would look to cut your long positions on the index by the end of this series, would you say you have enough confidence of rolling it over as a positional trade or that has not been confirmed yet? A: It has not been confirmed yet. I do not see this market beginning a new bull run. Yes, if somebody has been taking long positions from 5,500 onwards then today is a good day because on Thursday, market could be choppy and unknown. Therefore, it is a good day to close positions. At worse one will be able to buy it next week after 20-30-50 points higher, but at least the level of conviction will increase. So, it is a good time to exit. _PAGEBREAK_ Q: What you would employee even as an intraday trade on the Nifty, for someone who has not taken a position on the Nifty yet, long or short, what is the best way to play the day? A: If one has not got a position in Nifty or if one has closed it. That would be the same thing. One must look to go long in the Nifty. This is not a market where one wants to fight the momentum. That long position should be taken only on an intraday correction, not headlong at the opening. Use Nifty Futures. They are the best instrument for day trading. Friday in any case is a settlement so there is no premium there. Try to go long at any opportunity when the market has corrected. Q: Conversely if you see the market struggle a bit through the day would it be opportune to open up a short or that is not wise trade to trade? A: It is not a wise trade to take, but in any case for people who have positions they must lighten up. That is what I said this morning. One need to convert carry forward swing trading positions into day trades, do not carry positions now; lighten up, wait or even close all long positions, wait for intraday dips, go long and try to exit by the close of day. Q: How would you approach Coal India today? A: I would be a buyer. We had a big move yesterday. It is quite possible that the stock can build on it momentum. Every buying opportunity that we are discussing, need not be taken right at the open because today’s market maybe choppy so one has to see the context. However, Coal India should be looked at with an object of buying in. Q: Your views on IndusInd Bank? A: Theoretically one wants to buy, but in practice it is not possible. The run up from Rs 410 to Rs 480 has been very sharp, just two days. It is not wise to buy a stock after this kind of a run up, but that does not mean one should go short in it. One has to see that he gets a good entry point. That may take days. Q: Is Unitech good for more? A: It is good for more. It is making all the right signs maybe one want to wait for intraday dip or a couple of days of correction. All stocks correct. It is basing out and suggesting higher levels are ahead at least in the short-term. Q: How are you trading Educomp Solutions? A: Educomp is no longer in the Futures & Options (F&O) list so one cannot go short in it. If one could, one would have still sold it and there is no way one want to buy it. Q: Your views on Reliance Infrastructure?   A: Reliance Infrastructure is a buying opportunity. I am not very keen on Anil Dhirubhai Ambani Group (ADAG) stocks except for Reliance Communications. We suggested buying RComm even after the run up has started. That has paid off well. Therefore, theoretically Reliance Infra is a buy, but there are many better stocks in banking. Q: What would you do with Wipro after the big crack it saw yesterday? A: After the big gap down the chart is in a downtrend and one should be selling it, but I would not sell Wipro at these current levels. I would simply avoid it and stay away. Q: How have you read this recovery in gold? Is it looking like a sustainable bounce back or a bit of a dead cat bounce? A: We start with assumption that it is a dead cat bounce. If it sustains, if it stabilises then we will review that picture and for all we know Rs 25,000 per 10gm could have been a low in gold in terms of rupees, but it is too early to make a call and there is no rush. I do not think gold is going up to Rs 32,000 per 10gm in a hurry. So, wait patiently.