Build short positions if Nifty moves towards 5200: Sukhani

Sudarshan Sukhani of S2analytics.com sees Nifty moving in a 200 points range in the near term. In an interview to CNBC-TV18, Sukhani said that the upper range for the Nifty would be 5,200 while the lower range would be 5,000.

One should build short positions if it moves towards 5,200 and go long if it heads towards 5,000, he suggests. Below is the edited transcript of his interview with Udayan Mukherjee and Mitali Mukherjee of CNBC-TV18. Also watch the accompanying video. Q: It was a dramatic close yesterday compared to where we opened up, so just for the near term what kind of range would you set out for the Nifty while working on trading assumptions? A: The range is about 200 points and we saw those 200 points come about in two days. The upper limits are 5,200 and the lower limits are 5,000. So I would expect the Nifty to move and gravitate inside this broad boundary. Then the trade is; if it moves towards 5,200 build-up short positions and go long when it moves towards 5,000. Q: Exide is in your buy list today? A: Exide is a buy because the market itself  is likely to be choppy so it makes sense to look at both buying and selling opportunities. Exide is a buy on an anticipated reversal. It hasn’t reversed but its giving the first signs of that. It may or may not work out but when these anticipated reversal works out, we end up buying at the lows of the down move and that’s always a pleasant experience. So buy Exide. For the last three-four days it’s suggesting that a reversal may be possible on the up move, keep the stop losses and if the stop losses are not triggered hold on to the stock, not just for today, till either it makes a move in our favour or doesn’t.  Q: You have chosen Polaris from the midcap IT? A: Polaris fell a lot from Rs 168-170 to Rs 125. For the last five-six days, Polaris has not been participating in the decline that we are now seeing in the Nifty. That tells us that it is possible that the decline maybe over. Like Exide it’s a buy on anticipated reversal. Midcap IT is giving reasonably good signs; yesterday it was Mphasis. The broad midcap sector is suggesting that good things maybe coming on the upside. In a choppy markets there will be sectors that go up, so its quite possible that midcap IT is coming under that area. So Polaris becomes a buy and if this works out we are buying at the lows of the down move. I would suggest that Polaris should be watched carefully today. Q: You are selling Biocon? A: Yes because Biocon never picked up. There were some brief relief rallies but after that big decline that occurred on the back of news it’s not done anything. Yesterday Biocon broke down from a trading range and that is not good news. So any strength in Biocon found today, should be used to go short. The chances are that this trading range that Biocon is now exhibiting will be taken out on the downside and the bear market in Biocon is intact. So again in a choppy market, with broadly the Nifty likely to move and have a pressure on the downside, we should be looking at short selling. Biocon is one of the weakest in the pharmaceuticals and quite weak in the F&O section. Q: You have a sell on Dr Reddy’s as well? A: Yes, but I will not make that a habit because Dr Reddy’s has been an out performer. All good stocks sometimes turn up, turn down, go through corrections and the chances are Dr Reddy’s has begun a correction. There is some more downside before it stops or reverses. Dr Reddy's had bad last two days and we are likely to see follow through on the downside because Pharma companies have this tendency of single directional moves that is either up or down. So it is a very interesting short sell and there are targets. The targets should be obeyed because this is not a free fall but go for it. Q: Shriram Transport Finance’s chart looks weak to you? A: Yes the chart looks very weak and when Shriram Transport Finance was crossing Rs 610-615 there was an imminent sense of a breakout on the upside and this is how technical trading works or rather any trading. Sometimes the views change based on what price movements are. Shriram Transport Finance has already broken that Rs 570-575 level which was a strong support. Yesterday it fell on a day when most stocks went up. The chances are that it’s now going all the way down to 500 before it stops and stems its decline. So it is a very weak chart and assuming that the market gives a knee jerk reaction on the upside after results, that is a short sell. _PAGEBREAK_ Q: You have a buy on Tata Motors today? A: All we can do with Tata Motors is to buy on dips. Unfortunately for buyers yesterday, it rallied intraday. Even at current prices a test of Rs 320 is quite likely. We want to go and see whether it goes up, touches Rs 320 because of the big move yesterday. Tata Motors need not be bought at the open. We have to wait patiently for an intraday consolidation and then it would be sensible to go long in it. In fact, even the differential voting rights (DVR) could be used. Q: How you would approach Nifty now if we were to start flattish and spend the morning in 5,100-5,140 kind of range? A: I would not touch the Nifty for trading today if that happens. Yesterday, and on Friday we had big ranges and after big ranges, almost inevitably choppy market conditions prevail. So it’s better to step aside and let the Nifty do its job. Today is not a good day to trade the index perhaps only individual stocks will be in the focus. Q: How would you trade TCS this morning because pre-opening is suggesting some weakness for it? A: I would go long in it, not necessarily at the opening but at some point during the day. This knee jerk reaction on the downside is a buy on dip opportunity for me. TCS’s charts have nothing on the short side. There are excellent buying opportunities every time there is a slippage in price, so I would be long in it. Q: Banks have been weak but have you had a chance to look at some of the non-banking financial banking companies (NBFC), something like Power Finance Corporation (PFC), Rural Electrification Corporation (REC) because they as well lost 3-4%? A: We have talked about PFC earlier because that kept coming in my sell list and there was a difference because REC was not as weak as PFC, while we sometimes consider them to be twins. Power Finance Corporation continues to be weak. At Rs 150 there is no justification for buying it. Yesterday’s price action suggests that maybe we will get a relief rally but I wouldn’t go long in it. If somebody has short positions in PFC this is a good time to get out of it. I am waiting patiently for a rally to go and sell into it. About Rs 170-175 could be an excellent level to go short in it again. It’s a very poor chart Q: Have you been tracking Petronet LNG? At Rs 135. How would you approach that? A: Yes I track it, it’s a favourite and it fell, so we kept away from it. At Rs 135 for the last three days Petronet LNG has not been falling. Here is an example of what maybe a reversal because it hasn’t reversed its downtrend. But the first signs of a possible imminent reversal are available, it’s a trade worth taking on the long side. The advantage of these trades is that they are low risk in terms of stop losses. Keep a tight stop loss of Rs 125-126,or even the lows of today and if it works it gives you a multiple time reward. Q: How do you approach BHEL after yesterday’s 6% rally? A: I would stay away from it. While it’s very tempting to think that I might be the person who bought BHEL at its very lows, I don’t think that is going to work out. Yesterday’s rally probably came on number of different considerations, which I don’t understand and most market people won’t understand it. But the charts don’t suggest any buying at all. It needs to stop here, consolidate and build a base. It’s too risky to go long in BHEL. Q: Any targets that come to mind on TTK Prestige? A: In TTK Prestige targets would be Rs 2,500. It started the rally from Rs 2500, went to Rs 3,500 and became a ridiculous play. There are number of stocks that come into play and people forget. At Rs 2,500 this leg of the decline will be over. We have to see then. Disclosure: I do not have holdings in the stocks discussed