Market to be subdued today; book profits: Sudarshan Sukhani

The Indian market had a spectacular run last week. In an interview to CNBC-TV18, Sudarshan Sukhani, s2analytics.com says the market will be subdued today and for the next few days. "At this point, the best approach is to take profits," he adds.

Also read: FIIs infuse over Rs 9,000 cr in Sept Below is the edited transcript of his interview with CNBC-TV18's Sonia Shenoy and Latha Venkatesh. Q: We had a fabulous session on Friday. Do you see any follow through this morning or given the kind of global cues, our market may be subdued today? A: Our market will be subdued today and for the next few days. We have to understand that the Nifty cannot go up 50-100 points everyday. It is mathematically impossible. So, we have reached a stage where the market will have to take a pause and probably a longer pause than we image. That pause will be a consolidation as well as a correction. Markets do correct. So, at this point, the best approach is to take profits. Professional traders should also look to go short, others should simply wait aside. Don’t keep any long positions in the Nifty and Bank Nifty now. Q: Where would you take profit first? Would it be in the high-beta names say the ADAG names, the big infra names, would that be the first place to buy that insurance? A: The profits should be taken in the indices. Individual stocks still would offer opportunities for buying and for selling, both. So, I would take profits in all the banks. We have been pushing the banks for the last three weeks now, all including the PSU ones, the bank index, as well as in the primary index and Nifty. There will be selected pockets where actually buying could still be done, but the larger ones - pharma, IT, FMCG all should be closed. Q: You have a buy on DLF for the day. Where would you place your target and your stop loss? A: DLF has done some nice things. It has broken out of its strong resistance level at Rs 225-230, which was unusual. I did not think it would do so, but it has done it. So, for the short-term trader, assuming there is a minor dip in the market today or a small correction, that dip represents a buying opportunity into DLF. I would expect it to move to Rs 245 or so. Since, we are likely to enter choppy waters now, all trades and traders must follow the stop losses. Q: You have a sell on Sun Pharma. One would have thought in days of consolidation people would migrate to pharma stocks. Why the sell on Sun Pharma and what kind of levels? A: The migration was done for the last few months. I think people are now willing to go for high beta sectors whenever the next opportunity arises. Sun Pharma has made a rare pattern, a triple top and is now coming down suggesting probably a larger correction than normal is eminent. So, Sun Pharma is a short sell. For those who are not keen on short selling in a roaring up trending market, they can simply step aside. Disclosure: I have no personal holding in the stocks discussed. _PAGEBREAK_ Q: What about something like Alstom Projects? We don’t see this generally on your list but you have a buy on it for the day? A: What Alstom Projects is doing is, it is making a small base and it is now on the verge of a breakout. Now, because the softness in international markets today, it may not breakout now, but it should breakout in the next few days. Stocks that build a base and start moving up are stocks we want to be in because sometimes they will go contrary to what the market does and Alstom Projects could easily do that. So, it is more of a positional trade than a day trade. It is possible we will see follow through and then become a day trader. Otherwise, look to buy it expecting a breakout on the upside. Q: You have a sell on MphasiS, it didn’t quite participate even on those few days when we saw the midcap IT stocks do very well but why sell? A: I was quite upbeat on MphasiS. But, one of the advantages of technical trading is that we are very flexible, we don’t take a five year view and stick to it. Here, the charts have disappointed. What I thought would be a sustained up move, has actually fallen flat with a strong resistance between Rs 400-410. Repeatedly MphasiS is coming down from that resistance area. If it falls a little more it will confirm a bearish pattern, it will also confirm a large distribution. So, rather than question why it is so, it is probably a short selling candidate. Q: Bata India has been one of your preferred stock. Do you think it is topped out for now or do you see a lot more on the upside there? A: I see a lot more on the upside there. Naturally, in a softening market Bata India will not do what it would have done otherwise but it is doing the right things. These stocks will not stop here. A lot of these stocks will go much higher than we can imagine, Bata India is one of these stocks and I would expect it eventually to reach high four digits, not today of course. Bata India is a buy. If you see any intraday consolidation in Bata India, go ahead and buy it, it is an excellent intraday trade also. Q: You have a buy on Aditya Birla Nuvo? A: It shot up on Friday with a very big move. It is very unusual for Aditya Birla Nuvo. It was in a trading range. It came out of that trading range and actually met its trading range target all of it in just one day. But the fact that it moved out of the range, it reached and hit the Rs 860-870 levels - that tells us that this stock is now beginning an up move. So, here is a positional trade rather than just a day trade. But, if there is any correction or dip and we start seeing follow-through for intraday trader, here is another stock like Bata which is probably moving higher. Q: So would you expect it to even touch its near term highs of Rs 1,000? A: I would expect it to touch Rs 1000 and irrespective of how deep the correction in the Nifty is, this one should eventually go there. Q: If someone wanted to continue holding their long positions, what kind of stop losses would you ask them to maintain now for the day? A: The stop losses have moved to 5,650. This is for people who still want to hold their long positions. I would suspect that the markets will come down to 5,650. So, you might as well get out while the going is good. But even then, no one knows exactly what happens, 5,650 is my stop loss. Q: How would you play Axis Bank? Would you see that as one of the short candidates at all? A: No I didn’t mean that, I meant that we should take profits and get out. Stocks are not short selling candidates except for some exceptions. If some traders want to go short and they see the markets stalling, then the Nifty and the bank Nifty will be better than going for an individual stock. There is lot more stock risk than there is market risk. So, Axis is still a buy. See the trend is up but after that big move I would hate to buy it unless it goes through a deep correction. _PAGEBREAK_ Q: What about Punjab National Bank (PNB)? That was the biggest gainer last week. How would you approach that today? A: Today again is a time when people who are long in PSU banks should take their profits and say thanks a lot; it was a lot of fun. In theory these stocks are in uptrend we all understand that. But as a matter of tactics I would not touch it, I would not buy it until and unless a lot of time is spent either in consolidation or in correction. Q: On power sector, on high beta ones like Lanco, GVK, GMR - what would be the strategy in those stocks? A: I would buy them. They are buy on dips. All of them have run up on Friday. So, today, in the morning to go head long and try to buy at the highest point what is likely to be the highest levels today is not a good idea. But, GVK power inspite of all the bad news that has come in, Lanco which is under performing but still the point remains that these are momentum buying opportunities and these opportunities still exists unlike banks where a lot of stalling is possible. Q: What about IT stocks, they lost with the rupee rallying, how would you play them this week, would it be a time when you could pick them up? A: The market itself is likely to consolidate. So, IT stocks are best left alone. If at all someone wants to take a trade, I suspect it could be on the short side. Q: Anything in the ADAG pack that you want to pick for a strategy either ways, up or down? A: Reliance Communication (RComm), at Rs 64-65 it is an excellent buying opportunity. I would say that even for the position trader, if you want to hold a position and if you are looking for a stock to hold it in, RComm is probably a good stock. For the short-term trader also, there is a long bias and there is a potential for upside movement. Q: At what point on the index do you advocate a fresh shorting position at what level? A: Below 5,650 short selling becomes justified. This is a market that’s going up. Short selling should be done with caution. I could easily see a scenario where the market slides all the way down to 5500. I am not saying it will. I am saying, as a scenario, it is possible. So, there is money on the short side also. It is just that it requires far more care. We could actually buy blindly but we cannot short sell blindly. Q: So the first trades in the morning would be long trades at all or would you watch? A: I’ll be watching, I am getting out of all my trades whatever I did not on Friday, I am getting out. The idea is to relax and watch this market, see whether at all it has the momentum for another upside thrust, I doubt it but we’ll see.