Sudarshan Sukhani sees no trade in Nifty; all PSBs weak

Sudarshan Sukhani of s2analytics.com expects to see some profit booking happening today. Indian equities have had a nice run this week, however, investors remain cautious as macro conditions continue to remain worrisome.

"We will stay where we are, just having a 10% exposure compared to what we should. Our stop loss for this uptrend is 5,350. A close below that tells us that things have changed and that also means that we are not going short. So the market is flat at this point of time and at least in the Nifty there is no trade," Sukhani told CNBC-TV18. Below is an edited transcript of the interview. Q: You expect to see some profit taking on the index today? A: I would think so. We have been trying to go long and not succeeding. We have those 10% positions in the market on the long side and that is because the market hasn’t picked up enough momentum. Today’s apparent opening which should be on the lower side suggests that we will not be able to build on our positions. We will stay where we are, just having a 10% exposure compared to what we should. Our stop loss for this uptrend is 5,350, a close below that tells us that things have changed and that also means that we are not going short. So the market is flat at this point of time and at least in the Nifty there is no trade. Q: You have a sell on Vijaya Bank? A: Vijaya Bank is one of the weaker public sector undertaking (PSU) bank. In fact, it is very difficult to say, which one of them is the weakest. All of them appear to be collapsing and they are doing that at periodic intervals; falling, stabilizing and then breaking support and falling again. Vijaya Bank at Rs 50 suggests that it’s breaking other significant support levels. Since it has been accompanied by most of its other peers I would assume that the trend is very clearly down, it’s a short sell, and something is going on in PSU banks which we do not understand on the fundamentals at least. But I know that the charts are telling us lower levels are still coming. So it remains a short sell. Q: You have a sell on Canara Bank as well for the morning? A: I have got sells on many PSU banks. I had to pick and choose. Canara Bank has been a disaster. It has come down to Rs 338 from a top of Rs 850 and its not stopping. It makes new lows. The stocks that make new lows need to be sold, especially when they are in a weak sector. I am a little surprised that the sector is not bottoming out, but that’s the way the charts behave and the markets behave. It continues to be a sell. There is a second suggestion, that one should not try and time this and try to buy them, it’s too early. They are still falling and probably lower levels are coming. Q: You have a sell on Power Finance Corporation (PFC) as well from the PSU non banking financial companies (NBFC) space? A: For PFC and Rural Electrification Corporation (REC), my impression is that they are in some kind of an uptrend in bull market. Power Finance Corporation however stalled. It stalled and made double top. That may not work out, but at least as a short-term sell, PFC seems to be suggesting that lower prices are coming. All the financials whether they are banks or just pure financials, especially in the public sector, are suggesting significant weakness in the chart. The market is probably discounting something which we will know later. Q: You would pick up HCL Technologies from the IT space today? A: We suggested buy in Wipro in the evening and all the four stocks are doing well. HCL Tech has been rallying. From Rs 450 it reached Rs 550. It doesn’t show signs of stopping. I do not think traders should rush to buy it in the morning. But if they find any sense of stability, it’s IT that will rally the first. So, HCL Tech should be a buy once the market suggests there is some sort of stable environment coming in. Q: What about IVRCL from the infrastructure basket, those stocks have also not done well in the last few days? A: They have been disaster. I had thought IVRCL was bottoming out but, the market has its own wisdom. It is now threatening to break its previous lows and that’s not a good sign, that’s not a bullish sign. It’s a sign that we are expecting much lower levels in the infrastructure space and that applies to the others like GMR Infrastructure, GVK Power & Infrastructure, Lanco Infratech and the entire group. We are having IVRCL because it’s now planning to make new lows that normally see a strong momentum thrust on the downside. Q: Your view on Coal India? A: It is making a bullish head and shoulder pattern and that is suggesting it may or may not go up today because the markets will do what they want but broadly Coal India is a buy. If there is an opportunity then we want to go long in it. As IT suggests, there is more upside. We are not challenging and saying that this is enough. We saw how pharmaceutical went on going up. So, also independently Coal India suggests that this is a buying opportunity. We shouldn’t ask question, just go long in it. Disclosure: I have no holdings in the stocks discussed. _PAGEBREAK_ Q: What is the view on Cairn India? A: The view was bullish yesterday and luckily Cairn India rallied. The view continues to be the same. Cairn is now breaking out of that Rs 340 resistance. It has already done that. I think it will do it decisively. We want to be long in this. There is hardly any stock here where you can go long. Cairn is one of the few. Eventually it should reach Rs 400. Today it may or may not rally. It is not an intraday call. Q: Are you seeing any bottoming signs in Orchid Chemicals and Pharmaceuticals? A: I am not seeing any bottoming signs in Orchid Chemicals. But the point is that it has picked up yesterday. For the last three days it has been giving back to back rallies and we have to respect even the short-term uptrend. So, for a trader who is looking at a day or two days of positions, Orchid is probably a buying opportunity on a dip. But beyond that, I would not advice any positions. Q: How much more do you see in Voltas? A: Much more. It held on to its Rs 100 supports. Since then we said, it’s doing well in spite of its results. It moved up 15%. It is at Rs 115 and now willing to breakout. Today may not be the day when one want to buy Voltas or anything else, but, eventually these stocks will work out for themselves on the upside. The next target is Rs 130 for Voltas. Q: Any thoughts on the charts of OnMobile Global? A: After that good rally from Rs 28 to Rs 47, OnMobile is now correcting. It is very difficult to say whether that was a bear market rally or this is a correction. But, I would go with the assumption that what we saw was a bear market rally. If that is so, then this correction can go much lower and it’s a short sell. Q: If you are sitting on profits on MTNL, at what point would you book out? A: Immediately. The eventual target for this move is Rs 50. But the way MTNL has rallied, it’s quite apparent that it’s been operated. Our initial targets were Rs 30 and that has been exceeded, it’s now almost trading near Rs 40. Get out of it, wait patiently, everything comes down. Then it becomes a buy again. Q: Do you track the chart of Adani Ports? A: Yes, in fact it was a sell two days ago in our morning list. It’s been falling like ninepins. I do not know what is going on in some of these erstwhile blue chips or whatever. It has to be a sell, it’s breaking all lows.