Mildly bearish on mkt today; sell on rally: Sukhani

Sudarshan Sukhani of S2analytics.com expects the market to see a opening rally on the back of better global cues. However, he is not long on the market and suggests that one should sell if a rally is seen.

"I have mildly bearish stance on the market today after the initial rally," he added. Below is the edited transcript of the interview with CNBC-TV18's Mitali Mukherjee and Sonia Shenoy Also watch the accompanying video. Q: What about the Nifty? Given what you are seeing in terms of global indications would you play for a long trade today? A: No, I would not. I would assume that the markets will see an initial rally in the morning but we must remember that on Monday evening all markets were down, so we should open flat. At the most, I am assuming we will get an opening rally and in the mid-afternoon if there is a rally then that rally is something to be sold into. So my stance for the day is mildly bearish after a rally. Q: Hero MotoCorp actually had a good session on Monday. Do you see that continuing into today’s trade as well? A: Yes, Hero MotoCorp is a great stock and you want to buy it on every dip, on every correction. It corrected for three or four days. It went into a sideways range. It had a very good session, but that also got it to a resistance level. If the markets are going to rally, if they are going to maintain their position Hero MotoCorp is likely to be an out performer. A stock that’s willing to breakout to new highs and needs to be bought into. For today Hero MotoCorp is an excellent trade. We can have a target maybe probably of Rs 2,290 even Rs 2,300 for the day trader. For the position trader you buy it and expect it to move further. Q: Oriental Bank of Commerce had a terrible performance in terms of its quarterly numbers, but technically you would sell that stock as well? A: Yes. It’s been consistently making those lower highs, lower lows pattern which is the hallmark of a bearish market. So, that it did not change even when we were moving up, down. We were doing different things in the broad market, even in the Bank Nifty, but Oriental Bank was maintaining its downtrend. That downtrend is likely to now increase. Yesterday, it made new lows and that’s not good news for the stock price. The chances are that it will have a target of Rs 210 initially and even slide below Rs 200 and I wouldn’t be surprised if it does that. So there are two trades here. One is that you can sell Oriental Bank for the day, maintain a positional trade on the short side and the second is you can sell this and look to buy a stronger bank like ICICI or maybe even State Bank of India and build up a spread trade. Both are valid, but it’s a sell in either case. Q: GAIL has been slowly breaking down this last week and half, do you see more downside risk there? A: Yes, it’s been breaking down. GAIL at Rs 400 was giving the impression that things are changing but it did not stop. It is like Oriental Bank wherein it makes those lower highs, lower lows and tries to begin a rally. But that rally fizzles out and then ends up at a much lower level. For three days GAIL has been in a narrow range. When a trend is well defined for a stock, then that narrow range inevitably leads to a continuation of that trend. So I expect GAIL to break down from that narrow range and make new lows. If it does not then the stop losses are very tight, so it’s a trade worth taking. But if it does, it’s likely to go and break Rs 330, go to Rs 320 and who knows go much lower because the trend on the downside is very strong. Q: Another one on your sell list is Siemens? A: Siemens has been a disappointment for almost 18 months now. After its buyback or whatever it was, it has been a complete disaster. Recently it made a high of Rs 840 and then made a double-top. It went to Rs 840 again for the second time, did not succeed. That double-top will get confirmed if Siemens goes below Rs 735-730. Although that event hasn’t happened yet, I suspect it will. At this point Siemens has been closing lower for two days after a brief rally. Markets probably did not like what it said in its results. So an initial target is towards Rs 730-735 where support comes, but I think that is going to be broken as well. Q: You have backed this one for a while, but good to go further on Tata Motors (DVR)? A: Yes. Just as the sell side when the stock starts making lower lows, lower highs you know they are going to keep going down. So you want to keep on buying Tata Motors. Fortunately, this time we have identified the DVR for two reasons; one is that it’s at relatively low cost and we have found that whenever the stock goes up DVR actually bounces better. So there is a little more bang for the buck there. You can spend the same money and get more returns. After three-four days of a consolidation Tata Motors is now looking up. It’s the perfect buy on dips trade. For today, if we have to identify trade of the day that should be Tata Motors DVR. Q: Your final call Zee Entertainment. What’s the target over there? A: The target is Rs 130 but this is not a buy on dips stock. This is in anticipation of a possible reversal. There is lot of risk when we are anticipating a reversal, because Zee has fallen from Rs 140 to Rs 125 but because it’s consolidating at a lower end of the trading range, I am assuming that it is possible. This is only an assumption and it could easily go wrong. If we catch Zee at the lows now then we are buying at the bottom end and then seeing it go all the way to Rs 130 and then Rs 140, if not there is a tight stop loss. So this is a high risk trade and that comes with high reward. _PAGEBREAK_ Q: How do you approach trade if you get a quiet start, but a start in the green? A: If there is a start in the green or even at par, I would still wait for some kind of a rally, to go and sell into the rally. My tone for the day is mildly bearish and that remains so. The only joker in the pack could be suppose we don’t get a rally at all, then we have to start selling at some point. But the view is that we should be selling. Q: Technically would you buy Pantaloon today? A: Actually I would buy that stock. I can’t buy it today, because after that big up move, the stock will normally correct. Suppose it opens with a gap again today, then it’s no longer in the buy zone for day traders, for short-term traders. But the very fact that this big gap has occurred, this big move on Monday has occurred tells us it’s also broken out of a trading range, it’s bounced from it’s lows and all things are going well for Pantaloon. So it’s a buy, not necessarily at the open of the market but at some kind of consolidation or some kind of a minor dip, the traders should go into it because such moves can continue much longer. Q: You have a buy on ACC as well for the day? A: Yes, that’s a reversal trade. ACC maybe now be bottoming out around at Rs 1,200-1,190. There is lot of support there. It has already fallen 200 points and I was bearish on it earlier. This is not exactly a buy on dips trade. We are banking on the fact that 200 points is a lot of decline for ACC. It’s standing at a technical support level, so if not anything we can see a relief rally from here and for all we know a new uptrend would continue. So for the day, in spite of the fact that ACC had a good day on Monday, that could continue today as well. So here there is buying possible for the day. Q: What is your view on Chambal Fertilisers which has been up again down again through Saturday and Monday in trade? A: It is much lower than where it was. At Rs 92, we were all expecting that it to go to some new highs after 15-20 years but that didn’t happen. At Rs 72, Chambal was down again on Monday. It had two up days and down again, but the broad trust of this stock is now on the downside. So, Chambal really is a sell rather than anything else. First there are two things; it’s not a buy and if at all somebody wants to trade you should be looking to go short and to sell it rather than to do anything else. Q: United Phosphorous may likely react to news this morning but technically how do you read that stock? A: Technically it still is a sell. If anything needs to be done in the stock then you have to go and sell it. The charts of United Phosphorous chart does not suggest buying. It has fallen from Rs 160-100, so in reality I wouldn’t actually go and short it at this lower level. I would wait for a relief rally, wait for something else, but the trade here is to go and sell at some point. Q: You have a buy on Reliance Infra for the morning as well? A: Yes and that is rare because most ADAG stocks in my list appear to be bearish. But Reliance Infra had a very unusual pattern that lasted for three days. It fell, then  made a narrow range on Saturday and it rallied yesterday although Saturday is included in it. But there is a sense that this could at least be a short-term reversal. Reliance Infra is a high beta stock and if we are seeing a reversal on the upside, there could be a lot of move on the upside before it fizzles out or before it consolidates. So for the day, Reliance Infra needs to be watched for a significant follow through on the upside and that’s a buy. Q: You have a sell call on WWIL? A: I don’t actually track it. The truth is that it’s not a stock you want to do anything with. But if at all there is a trade here, if somebody wants to take a trade, it has to be on the downside because the chances are it will reach Rs 9 even Rs 8.5. You really don’t want to do anything else in that. You don’t even have to trade it, but if at all somebody wanted to. Disclosure: I have no holding in the stock discussed.