See very strong rally in October: Sudarshan Sukhani

The Indian market has been subdued over the last couple of sessions. In an interview to CNBC-TV18, Sudarshan Sukhani, s2analytics.com says he sees very strong rally in October. "If the Nifty holds on to the levels we saw yesterday and begins a rally, the next stop is 6,000. So, certainly 5,700 will come in between," he adds.

He further says the market is expected to decide its direction now. "So far, this is a small correction. Traders should be positioned to buy this correction today. They should keep a stop loss assuming that this may not work out," he adds. Also read: Market to stay choppy, pick & choose; bet on CIL, M&M, say experts Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Sonia Shenoy. Q: How would you approach today’s trading session? A: It has been volatile and choppy, but that was expected after a very big move. Yesterday was worrying because the market closed at the lows of the day, after a gap down. Today, the market is expected to tell us where it is going, one way or the other. The SGX suggests that the lows were just random occurrence. If the market will go up then we will assume this was a mild correction. The other scenario is that the market continues to drift down today, sometime during the day. If that happens then we start worrying about the validity of the uptrend itself. So, today or on Monday, we will know exactly where we stand. So far, this is a small correction. Traders should now be positioned to buy this correction today. They should keep a stop loss assuming that this may not work out, but it could. The trade, so far, is short-term traders go long, keep a tight stop loss and be prepared to get stopped out. Position traders maintain your positions till today evening. Your stop for today is 5,450, but that will change. Q: You have sell on Divi's Lab from pharmaceutical space? A: FMCG and pharma is now giving the impression of turning around and going into an intermediate correction. Divi's Lab has actually made a bearish pattern and confirmed it yesterday. This is not surprising because after all even the best of stocks will correct, will pause, consolidate, will move down. So, this is not a bear market for Divi's Lab but for a short-term trader, there is opportunity on the downside and unless something spectacular happens to the Nifty on the upside today. Unless that doesn’t happen, these short trades should work out nicely. Q: You are bearish of Sterlite as well? A: Sterlite is a horrible chart. It is almost similar to the one Tata Steel had. It gaped up and then gaped down creating some kind of an island at the top, that’s fairly bearish. No matter what this market does, metals are going to underperform. Sterlite, for today, is a short selling idea. If the markets remain choppy, it could actually be carried over for the next week too. Disclosure: I have no personal holding in any of the stocks discussed. _PAGEBREAK_ Q: Reliance Communication will be in the news this morning fundamentally. Technically you like that stock as well? A: It is doing all the right things. It is making a small base, giving us a bullish pattern, it has not confirmed that pattern so we are buying in anticipation of confirmation. Sometimes we get good entries when we anticipate them. Reliance Communication is suggesting that once it breaks out above the Rs 58-60 level, it could have a decent upside. So, not many good trades are coming. But within the limited sphere of whatever trades are coming, Reliance Communication appears to be a far superior trade on the long side. Q: The month of September has been very fruitful for Titan. It spiked out of its three month trading range. Do you see more upside there? A: It does appear that the three day sideways move in Titan was just that - a sideways correction prior to another up move. We will find that out. That’s why we use stop losses. But I would assume that the stock itself is willing to go much higher. If this is a flag then we are looking at a significant upside still left in this stock. In any case the very fact that it is outperforming the Nifty at least now tells us that the flag pattern should be respected and bought into. Q: For Tata Motors, are you bullish on the DVR? A: I have found that the DVR has little more flexibility and a little more volatility as compared to the equity. So, the patterns are available for both of them. Tata Motors DVR had a big sharp dip yesterday and then it rallied back. For the last four days it is moving in a sideways range, it is not correcting. That sideways range is apparently a correction for the stock. Stocks that correct side ways rather than go down are giving us a bullish signal. It is a good stock to go. Wait for the first half and hour. If the Nifty shows signs of strength, these long positions should be taken. Q: You have a buy on Financial Technologies? A: It is a stock that doesn’t come in my buy list. But it is doing all sorts of good things. It has made a very small trading range, just lasted about 7-10 days and it is now willing to come out of it and it is at the highs of this uptrend. All these points qualify for it to be a buying candidate. I think the market also likes it which is the reason why it is moving up, giving us a one sided move. So, Financial Technologies is a short-term trade, don’t overstay but probably you can carry it towards next week if it works today.
Q: Do you see 5,700-5,800 levels on the cards anytime soon in the next series may be?
A: If the Nifty holds on to the levels we saw yesterday and begins a rally, the next stop is 6,000. So, certainly 5,700 will come in between. I see a very strong rally in October. We just need to stay where we are. _PAGEBREAK_ Q: For the day, if you have a long position open, where would you keep your stop loss?
A: That would be 5,450 for today. But if markets remain cheerful today, on Monday we’ll move the stop losses much higher. Q: Is there more upside on the chart of Zee Entertainment?
A: Some of these stocks are moving as if there was no bear market, there was no correction. Zee gives an impression of reaching Rs 200 now. It is a buy. A lot of the outperformers will remain outperformers in this market. Q: What about Vijaya Bank from public sector banks?
A: Most PSU banks are now bottoming out. Vijaya Bank has been a little laid back in the sense that Canara Bank or Bank of Baroda have done much better. But I think all of them will play catch up. To that extent Vijaya Bank is probably a better buying opportunity just relatively as compared to the ones that have already moved up. So, I would say it is worth buying into. Q: How about ICICI Bank?
A: Yesterday we saw ICICI Bank open with a gap and stay there. I think the reverse should happen today if the SGX suggests what it’s suggesting. If that is so then a small three day correction in ICICI Bank is over and short-term, intraday traders should be looking to go long in it today. Q: How would you approach something like Wipro now?
A: IT is going to go through a deeper correction. If not a correction, then a consolidation, as it depends on how the market works out. So, there will be more opportunities to go long in Wipro. The trade is on the long side but I don’t think there is hurry. Q: What do you make of the chart of IVRCL after the volatility of the last couple of days?
A: It is a buying opportunity but that’s about all. I am not so upbeat on infrastructure stocks. They fall just as they go up and we are in some very treacherous political environments now. We are all upbeat because things will become better. All it needs is one piece of news in the day and for everything to start tumbling down. Then infrastructure will fall the most. Q: A word on OnMobile?
A: OnMobile is a better chart. It is building a base. It is more of a position trade rather than a day trade. But somebody wanting to take positions in OnMobile would be justified in buying that at current prices.