Nifty to breach 4900; sell on intraday breakdowns: Sukhani

It has been a steady downwards trend for the Nifty throughout this week and Sudarshan Sukhani, s2analytics.com sees the market closing the week on a lower note.

He expects Nifty to breach 4,900 levels today. “If it is not done today, then it may certainly happen in the next week,” he added. The bias for the market is on the downside, so he suggests selling on small intraday breakdowns and on rallies. Below is the edited transcript of Sukhani’s interview with CNBC-TV18. Also watch the accompanying video. Q: It has been a steady trend for the Nifty downwards through this week, how do you think we will close up the week? What kind of targets are you setting on the downside now for the Nifty? A: We will close up lower and today should be a down day. The markets do what they do, but I would assume that 4,900 could be breached today. This is a downtrend, the rallies are weak, the downtrend gets initiated intraday. I am not saying this market will not go up, but we need some signs, those signs are not visible so we would go with their existing trend and 4,900 should be breached. If it is not done today, then it may certainly happen in the next week. The bias is on the downside, the idea is to sell on small breakdowns intraday and sell on rallies. Q: In you long list of sells today, you have infrastructure, IVRCL? A: IVRCL was a disaster. It went up on news and it has given up all the gains. Not only that, its distribution patterns are now visible. The sense is that it is not only a target of Rs 46 that we are going to see although I don’t know where it will go down to. So it is a short sell and as a stock one can take a positional trade. I would expect yesterday’s big decline to see lot of follow through today. So, on any small rally, any small breakdown intraday, it is an intraday trade also. This is actually a lesson that markets don’t simply go up. Infrastructure fell, then it rallied and there was a sense that we are back to the good old times, but that doesn’t happen, it takes months and years for such sectors to consolidate, build bases. Q: What about Orchid Chemical from pharmaceuticals, you are bearish on that as well? A: Yes. Again so many stocks are doing it; first they made distribution pattern, now they are in the verge of significant support breakdowns. Orchid has support at Rs 165, repeatedly over the last four months; it has come to Rs 165 and bounced back for whatever reason. It is now threatening to break that. When a significant support level is broken, with a pattern of lower tops and lower highs in any case in place, that is a message that this stock is going down much lower. I have a target of Rs 150 for this but that is not the final target, if we see a breakdown like many other midcaps, we will see much lower levels. Q: BEML has got crunched down this last fortnight or so but that is the one you would buy today? A: I thought I will, then BEML figured prominently in the newspapers. But the chart suggests that after all that crunching down, all that disaster, BEML is in a trading range for the last about ten days. Maybe it is ready for a relief rally; maybe it is ready for a significant bounce. This needs to be bought only when it first starts showing signs of intraday strength. If it falls 2%, we don’t buy it. It needs to go up a little to give that conviction that something is going on here on the better side, on the upside. Q: How about something like an Alstom Projects ? A: It rallied, broke out above a resistance level and I was one of those who said this is now a buy. But it simply collapsed. Alstom is now, again threatening to break below that Rs 345-340 level at which point, it starts going to new lows. Just as we have talked about new highs being bullish; the new lows, even in a short time span, are very bearish. Rs 345 is the level below which it starts a cascading decline and that is not good news. It is not the only chart that is showing that. So either we find sudden support coming at current levels amongst all midcaps together or we are going to see these breakdowns one-by-one. Q: What about Jindal Steel and Power Limited (JSPL) that is another bad looking chart? A: Yes, it has already cracked down. It didn’t even make an effort to hold on and see if it could make a support line. It is just falling and now it is at new lows for this bear market. JSPL was in a bear market for some time, it didn’t go up and that is bad news. It suggests that Rs 425 is an intraday short-term target but I don’t think even Rs 400 is going to be held on to it. We just have to look at the chart of these midcaps and some of these largecap companies to start worrying, exactly what is the market telling us, why are all these standing at levels below which there is nothing to hold them. Q: But you continue to like Tata Consultancy Services (TCS)? A: I think so. If by some chance, the markets begin a rally today, I would immediately look at TCS and consider going long in it. That is one stock that has confounded all pessimists. At least I thought it will come down to Rs 900, it didn’t do. It is an excellent opportunity to go long on any signs of market revival, intraday also. _PAGEBREAK_ Q: If you do start here around 4,940-4,930, will you take any profits on your shorts or just keep them open? A:I will keep them open but during the day if the markets go lower, I will take profits on half my positions. The other half are absolutely positional trade, so there is no rush. Even if there is a rally, I would prefer to keep them.
If once this market cracks below 4,950, there is nothing to hold it. So whether it falls today or next week, there is no support. Q: What kind of targets do you see on Jaiprakash Associates? A: Jaiprakash Associates has a target of Rs 55 or even Rs 50. I was referring to some support levels in many of the midcap stocks earlier but some of them have already done that, they have already broken down and it looks like they are going to complete their pattern targets on bearish side, on the downside  and JP Associates target is anything between Rs 50-55. Q: What about the rupee that has been very volatile since yesterday, how would you trade it despite yesterday’s attempted pullback and the subsequent slide? A: I have a stop and keep that stop in the rupee and trade it on the short side which means expect the rupee to get devalued against the dollar with a target of 55.5 at this point of time, in this current move. Keep a stop just above 52 and go short in it, which means take a long position for the dollar. Q: Did you have a look at the charts of Sintex Industries? A: Yes, it is another one of those stocks that broke down at Rs 75 and gives a pattern target roughly between Rs 50-55. If Sintex were to come to this range of Rs 50-55 that would be very interesting because it would have completed its downside target and it may eventually become a buy. But at this  point there is lot more downside at least 15-20% more. Q: What about Glenmark Pharma that has been hitting new highs? A: Yes, all those stocks hitting new highs are buying opportunities. For Glenmark, I would be a little careful about rushing to buy because after a big up day, the stock can easily consolidate and correct. But the charts are excellent, you have to mark it and whenever there is a dip go long in it. It could actually out perform and even go against the declining market. The eventually target is Rs 500 far  higher than where it is now Rs 350-360, one must go long. Q: How about Jain Irrigation that one as well looking like a short call? A; Jain Irrigation has broken down from all kinds of patterns; it is probably going to become a textbook bear market, maybe in the future. Now the targets are very close. I think Jain Irrigation targets for the pattern is around Rs 65-68. So it maybe completing its worst part of the decline then it will consolidate, chop around but at this point the trade is only for 10-15%. Q: Your view on IDFC which had a pullback yesterday? A:  Yes it did and that itself suggest that maybe it is a buy but in my dictionary, it is not. That pullback is a sell. I think a minimum decline to Rs 110 is possible but my own sense is IDFC will eventually crack and go below is 100.