Start of May series to be volatile; build shorts: Sukhani

Sudarshan Sukhani of s2analystics.com believes the market will start the May series on a volatile note. In an interview to CNBC-TV18, Sukhani says he is mildly bearish for the day, due to which he is short on the market.

His advice is to take positional trades on the short side. “However, when a new series starts there is some volatility and invariably prices jump up, but I don’t see the markets running away on the upside today,” he added. Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video. Q: First day of the new series, how are you setting about trading the Nifty today? A: I continue to have a mildly bearish bias for the day but that’s not necessarily in the morning because when a new series starts there is some volatility. Iinvariably prices jump up also but I don’t see the markets running away on the upside, at least not today. So at some point the idea would be to sell the Nifty, and maintain any positional trades on the short side if traders have them. Q: JSW Steel is a sell for you? A: JSW Steel has been falling; it’s now at the lows of December and January bear market, so this is not a good stock to buy. These new lows in the stock tell us that there is much more downside. The rallies are very small and declines are significantly larger that’s a visible sign of continued weakness in the stock. There is a sell here, not just for today because yesterday it went up, did not hold the highs, closed at the lows and that’s a sign of more selling to come in. It’s also a positional sell. Q: Fast moving consumer goods (FMCG) have been the standout performer in the March and April series but you are bearish on Hindustan Unilever? A: I am bearish in the short-term. We are talking about short-term trades. So in the short-term Hindustan Unilever (HUL) has been sliding after Rs 425-430 resistance. In the short-term patterns the candlesticks turned bearish, the suggestion was that there is no buying once it crosses Rs 425 and that seems to be working out. So an initial target for HUL is Rs 400. But even though it’s a short-term trade, it’s a high probability trade because HUL has this tendency of failing to cross the highs and then retreating a lot. So there is a short side trade which could work out well.   Q: You are buying Jet Airways? A: Jet Airways does the right things on the charts and as traders, we have an open mind. The stock was rallying and after that rally, it went through a correction. The recent decline in Jet Airways from Rs 370 to Rs 330 levels was a correction and after a correction yesterday, it seems to have bottomed out and given a sign that buying is possible. An uptrending stock, goes through a dip, so this is a classic buy on dips case. What the airline does or doesn’t do is not my concern; the chart is certainly justifying a buy.   Q: Your views on Opto Circuits? A: Opto Circuits is a high risk trade, it has been falling. It has fallen from Rs 220 to Rs 175. Now there is a suggestion that this is a small base. It is probably making a small minor micro double bottom and coming out of it. There is risk because we are buying the lows and trying to catch falling knives. But on the other hand if we are right about it then there is a very decent rally and we are buying at the lows and that’s the reward also. I think it is worthwhile; traders can look at futures in it and also consider equity rather than leverage themselves. Q: Sesa Goa continues to be a sell? A: Yes. It continues to be a sell. It goes up Rs 5-7 in a rally and then fall Rs 20. That’s not the way a bull market develops. It will take lot of time. We have talked about it earlier that some of these stocks need to build long bases and it has not even started. So, yesterday’s results are nothing, the market has given a thumbs down, not to the results but to the downtrend which continues. Sesa Goa is a sell and it is probably a better sell than Sterlite Industries. Q: You have a buy on Max India?  A: Max India was in a trading range after that big upmove. It didn’t breakout of it and the trading range is over. Yesterday it moved to new highs but somehow retreated, although it closed better. A stock that is going up should eventually breakout if not today then tomorrow, so today I would assume that the new series could see Max India making an attempt to go to new highs. It should be bought on any dip, any intraday consolidation. There is some more upside here, so for traders, at least we have a bullish looking stock to buy in. _PAGEBREAK_ Q: What did you takeaway from such a flat start and what do you do with the index? A: I will still look to sell the index and maintain the short positions, which are positional in nature now. The idea is not to sell it in the beginning although the markets are looking fairly dull. I would wait for one hour and then go short in it for the day but the view is on the short side today. Q: Your views on Yes Bank? A: Yes Bank is now a sell for short-term traders. I wouldn’t advice somebody building short positions in it, if you are looking at six months. But for the next month or so, the stock has rallied and did something that’s called rounding off. It made a rounding top of some kind, its now falling. So, there is reasonable expectation that we can see somewhere around Rs 320 for this in the short-term. Q: You haven’t been upbeat on telecom, what do you do in terms of trading with Idea? A: Markets change, so Idea has seen those big declines and it has also fallen a lot. Yesterday it rallied and the rally  came at a point where it should have found support and it did find support. For a trader, who is looking at today, next week I would be a buyer in Idea. This is a buy on expected reversal and the chances are that if I wait patiently during the day, look for a sweet spot when it corrects mildly, and go long. Idea could make money on the long side, this is not a positional trade and it’s not an investing idea but a short-term thought. Q: How about Titan Industries? A: Titan is now a sell. Titan is on the verge of a breakdown. It hasn’t broken down. it is making those distribution patterns that I have been talking about but it’s on the verge of breakdwon. Once it does that it wil come back all the way to Rs 200. But for the time being the targets for Titan are around Rs 220 and that’s quite reasonable because it is trading at Rs 229, so we are looking at 9-10 point decline. But at Rs 220 that support level pitches in and if that breaks then significantly lower levels come in. Q: How is the TCS chart looking now? A: You have to buy TCS, it is not bearish. It made that big rally then it had a cooling off day. Yesterday it rallied again to close much better, of course there was Futures and Options expiry also but that doesn’t mean anything. I have been assuming TCS will come to Rs 900 but the market has better sense or has a different view. So TCS is a buy. This market itself is not running away, if the markets are stable then a target for TCS is Rs 1,235-1,240 on the upside. That is another 35-40 points from where we are and in a choppy market TCS could reach that target. Q: A word on Hexaware’s chart? A: Hexaware’s chart is a dream for the bulls, and people who want to buy. We have talked about it, it’s come in my buy list so many times. I don’t know if you want to buy on jump if it happens today, but you want to buy it on consolidation. Hexaware is a good chart, it consolidates invariably. Q: Any targets on the rupee? A: We could see a small correction in the rupee or rather dip in the dollar prices but its going to be a mild correction after this upmove. The targets for the rupee are now about 54.40-54.50. Disclosure: I have no personal holding in the stocks discussed.