F&O expiry to be choppy, Nifty may dip to 5600: Sukhani

The September F&O series will expire today, so Sudarshan Sukhani of s2analytics.com expects volatility to creep in. It is likely that Nifty may slip towards 5,600 because of this volatility, he told CNBC-TV18.

However, it may then rally back and perhaps again touch 5,700. The Nifty might end the day with the trading zone of 5,650-5,700, with this a breakdown will be postponed for another day, he added. Below is the edited transcript of Sukhani’s interview with CNBC-TV18. Q: Today it tends to be very unpredictable but you have been advising a no trade zone for a while, you see the same pan out today as well? A: It is quite possible, that’s what the indications are. With this 50 point zone continues to persist. We could see the Nifty take a move on the downside towards 5600 because of the volatility that normally expiry day brings. It may then rally back and perhaps again touch 5700, so these are intraday moves. It is quite likely that we will close right inside the trading zone – 5650-5700 that means that a breakdown will likely be postpone for another day. There is no harm; markets will do this. Q: Today there will be pressures and pulls of how positions are staked on expiry day but for a slightly longer run, for the next 3-4 days what is the sense you are getting in terms of how the Nifty will move? Does this kind of a long consolidation normally result in an upward break or a downward break? A: Given the nature of the rally that we have just seen 400-500 points, this could easily result in a downward break. It doesn’t have to, but I would say the odds are almost equal. Had the rally been shallower, it would have certainly led to another up move, but this time it could bring us down to 5,600 or even 5,550. Q: You have a buy on Hero Motors, take us through that one? A: Whatever correction comes in it is just a correction. I do expect October to end higher than wherever we end today. Hero Motors is making a very decent bullish pattern; it is one of the better stocks in the universe among the blue-chips also. All stocks correct it is something I explained repeatedly and we saw a deep correction in this one also. That correction seems to be over. A person looking for an opportunity, an intraday trade is available here on the long side and somebody who is willing to develop a long position here, I expect a breakout and eventually a crossover. Immediate targets are shallower but eventually something above Rs 2000. Q: You have a buy on Ranbaxy as well. Do you think the stock has corrected enough and now it is good to buy it on a dip? A: Absolutely and I also have to repeat that once a stock begins a correction we need to have some patience for the stock to develop and give us signs that the correction is done with. Ranbaxy is giving us those signs. Now, it is anybody’s guess whether this works out or not. That is of course a question with every trade. But here we have seen a dip, we have seen the dips stop. That means the trend is clearly up. Now, there is a strong chance that Ranbaxy can resume its advance. So, all the odds are stacked in our favour. In a choppy market, in a market that begins to move up, Ranbaxy in either case should do well. Unless the Nifty crashes, well of course all buy signals go void. Disclosure: I have no holdings in the stocks discussed. _PAGEBREAK_ Q: Apollo Tyres has been disappointing and probably emphatically peaking off for the past few days or may be a couple of weeks. Will you short sell it or will you just sell it? A: I would short sell it. In a choppy market, there are opportunities on both long and short side. Apollo Tyres is a short sell. The first support comes at Rs 80-81. It doesn’t have to go all the way there but the signs are that it is not sustaining its highs, it is breaking down. It is a very decent short sell because short-term traders must understand, even corrections are tradable for them. For a position trader you simply step aside and say okay I have liquidated and I am not doing anything. But a short-term trader should take advantage of Rs 5-7 declines in stock like Apollo Tyres. Q: Dish TV has paused for a little bit but you think it is going to resume its uptrend now? A: If I am reading the charts correctly, what Dish TVs pause made is some kind of a flag. A flag is made midway in an advance. That’s a small pause, very nicely made. So, if that is so then Dish TVs eventual target on the upside is Rs 97-98. It is a mouth-watering target. It has been a stock that has done very well. We have had a pause that’s why I like to buy on pauses. I think it is a trade worth taking. Q: For the past several months Arvind has been showing lower lows and lower highs but one thought the latest up move seemed too abrogated. Do you still think it’s a sell and will you short this one? A: It is a sell now. After those lower lows, lower highs Arvind literally took off. It moved from Rs 58 to Rs 80, that was a one way move. It is almost like a staircase, vertical. Such vertical moves will not last, they are going to see some pause and correction and at Rs 80 Arvind has strong resistance. Yesterday it found that resistance. So, for people who are long, take profits. For people who are willing to go short, put a tight stop loss and may be you’ll get Rs 5-7 on the downside before it stops. Q: You have a sell call on Power Grid. A: It is a surprise because Power Grid was doing so well. From Rs 90 it started and reached Rs 123-124 - that’s almost a 40 percent gain and then it started consolidating, what I thought was consolidation. That consolidation is giving the impression of a distribution. But this is clear distribution and lower levels are coming. Q: From the cement space, how would you approach something like an ACC? A: We want to buy ACC. I must explain that the fact that I am saying that the trend is up and we are looking to buy doesn’t mean that we buy it at the open today, that’s a mistake that many viewers and traders do. They hear about an idea and think that it needs to be implemented in the next five minutes. Trading doesn’t work that way. ACC is in an uptrend, we saw a very big move yesterday, we have been upbeat on cement. So, once this big move enters into a consolidation ACC becomes a buying opportunity, it is not an opportunity today. Q: How will Bharti Airtel pan out? A: It is a very difficult call because Bharti was supposed to build a base and move up. Now it suggests that apparently the base building exercise has more or less dissipated, it is not doing the right things. But the trade is still on the long side. Again not necessarily today, but if we see intraday support for Bharti developing, I would go and buy it, it is not a short sell. _PAGEBREAK_ Q: How would you trade Power Finance Corporation (PFC)? A: It is a sell, there is no doubt. We saw PFC and REC rally and then suddenly, those very big declines started. For the short-term trader the trade is on the short side and probably one that is worth taking. We are going to see volatile markets today but otherwise I would say that it is a trade that you can take on the short side and look for lower levels. Q: Would you be negative on Hindalco? A: There was a gap up on Friday, most stocks rallied on the upside and then Hindalco refused to move up at all. So, that gap suggests that it was more an exhaustion gap for Hindalco rather than something better. So, the long side is almost absent here. If at all a trade needs to be taken it has to be a short sell. Q: What about something like Coal India? A: Coal India is undergoing a correction. Since short-term traders, day traders can take advantage of these corrections, the trade is on the short side. Sometimes the trades can be split. If you are a position trader, if you are looking for a three-six month time frame then you wait patiently for Coal India to complete its correction and go long. For somebody who wants to take a trade for today, for the next two-three days take a short position. Q: So, Coal India is a long-term buy, that is intact you would think? A: Absolutely yes. The long-term buy is intact. Traders don’t have to tick up and down. For short-term traders, when there are opportunities they should go ahead and take it. Coal India is representing an opportunity till it comes to support. For most others wait it out. In the next few weeks Coal India will come to very attractive levels at which point there is only one trade there to go and buy it. Q: Is there any opportunity in the sugar stocks, a buy on dips perhaps? Which stocks would you pick up? A: I would pick up only Renuka. It has made a bullish pattern. It has not done anything beyond that. Sometimes the markets don’t work on demand. They just do what they have to do. But I would be very keen to buy it as soon as an opportunity comes, may be tomorrow or may be next week. Q: What should be the attitude at opening trade for the Nifty itself? No trade zone if it is within those parameters of 5650 and 5700? If it abrogates your goal posts what would you do? A: It could abrogate those goalposts. It could breakout because today we can expect a lot of intraday volatility. That would not be a trade. We want it to close at least for today. But there is a day trade that is available due to the volatile environment. If the Nifty comes to 5,650 and settles there for a few minutes then there is a trade on the long side, it is just a day trade. You expect a bounce towards 5,700 because in the 50 point range the Nifty is doing these bounces - goes up, comes down. It is possible to trade. Q: And what would be the stop loss in that trade? A: Just 15 points, either it moves your way or you get out quickly.