Expect choppy trade; look to exit long positions: Sukhani

Yesterday saw Indian equities gain nearly 1% to end the day on a strong note. The Nifty leaped past the 5,400 mark, pushed higher by strong liquidity flows. However, expectations are the rally may not continue today.

Sudarshan Sukhani of s2analytics.com tells CNBC-TV18 that the rally may stall today, and that the indices will trade choppy. Therefore, his advice is to book profits on long positions because it is not a good day to trade bullish calls. Below is an edited transcript of his interview with Udayan Mukherjee and Sonia Shenoy. Q: What is your call on the Nifty after yesterday’s good run? A: Yes, we saw a good run yesterday, but my own sense is that the Nifty may stall today. The key word here is may, because obviously we don’t know which way it will go. That is why I was not keen to add long positions yesterday. Today, we are going to liquidate most of our long positions and step aside, and then wait for this market to renew its advance. I am expecting a choppy market today, so it is not a good day to trade. Also, take profits on whatever long positions because it’s not a very bullish prognosis today. Q: You have got a bearish call on Cummins? A: Cummins saw a very big rally, one day rally. Then it built on the back of that rally. But for the last five days it’s falling again. Cummins was already in a bear market of some kind. The rally told us maybe things have changed, but apparently they haven’t. In a market where I expect choppiness to come and the bullish fervour to come down, Cummins is probably a very good short sell. Something has gone wrong in this stock. The upswing is over and we are looking at lower levels. Q: You have a same call on McLeod Russell too? A: We have been very upbeat on McLeod Russell from the point when it was at Rs 220 and we have ridden that rally all the way to Rs 320. Now for the last two months it’s stalling and it’s also making some kind of a distribution. I think that distribution is now getting confirmed. It first broke below Rs 320 and once it goes below Rs 313-312, it starts a new intermediate downtrend. So, the bearishness is that even if this is a deep correction, short-term traders, position traders can take advantage of the decline. Certainly there is no buying opportunity. Please don’t buy on dips. This is a decline, not a dip. Q: Do you think ICICI Bank is good for Rs 1,000? A: It should be good for Rs 1,000 if the Nifty starts its rally again. ICICI Bank is in a small trading range and this time it should breakout. I am a little unsure about the broad market today. It’s just one day feeling. I am sure it will change by the afternoon. But if Nifty does well ICICI should be an outperformer. We will even think, why not buy ICICI rather than the Nifty. Q: You have a buy on Cipla. A: Yes, it’s much safer trade. We have becomes defensive today. Cipla is now in a trading range. We saw a big rally in Cipla and I said let’s wait. Now that waiting was wise. It’s now in a trading range on the verge of a breakout. This breakout should be tradable on the upside. So, Cipla is now a buying opportunity. There is a decent rally that is imminent here, whether it comes today or in the next few days. So, I am fairly upbeat. The Options are liquid here. You can buy calls for September or take Futures or equities. But it’s worth trading. For intraday also watch for a buying opportunity. Q: You would say the same for Sun Pharma? A: I would say the same. Sun Pharma had a decline. That decline is well and over done with. My sense is that, that was just a decline. That was a dip in an ongoing roaring bull market. Defensives have come into play again today. Sun Pharma should do well, not just for the day, but also for probably the next few weeks. So, I am upbeat on this stock. Day traders should focus on these two pharma stocks and see what they can get out of it. Q: You have a sell call on Adani Ports for the day. A: That’s because Adani Ports has been a very disappointing start. It does nothing. It goes up a little and then falls much more. It’s on the verge of another breakdown. Infrastructure has not been a favourite of this market for the last few weeks and that’s likely to continue. So, Adani Ports is a short sell. I think traders who go and short sell stocks should consider this one carefully. Disclosure: I have no holdings in the stocks discussed. _PAGEBREAK_ Q: Apollo Tyres had a good run yesterday. You think there more on the upside? A: Yes, it’s possible. We have been identifying Apollo Tyres for buying for sometime now. But after this tremendous rally, I don’t think traders should simply rush in and enter. They must wait for the exact opportunity to enter. But I would assume that a rally towards eventually Rs 100 is possible. Q: What about Reliance? A: For the last three days it’s been stalling a little. That’s natural. After big rallies, this one can stall. The targets for this are Rs 850. I would assume that Reliance, ICICI Bank, Nifty will all move together. If the Nifty begins a rally again, Reliance will almost certainly reach Rs 850. Q: Ambuja Cements knows no boundaries on the upside. Do you see more there? A: Yes, the small corrections are there which we have just seen. This is a buy on dips stock. The correction is over. Consider buying it. The chances are that Ambuja may do something of its own irrespective of what the Nifty does. Q: You track LIC Housing. What is that chart telling you now? A: It’s more or less bullish. It’s not done what I thought it would do. It’s not had momentum on the upside, but it’s still making higher highs, higher lows. For whatever it is worth, there is a buying opportunity here. The point is that there are other stocks in the same sector, for example IDFC, Reliance Capital. So, it may not be the best stock for a momentum trader. For a position trader, it’s still a buy. Q: How would you trade Orchid Chemicals this morning? A: After yesterday’s big gap, we will start thinking this is it, but I don’t think so. It needs much more work before we can get bullish. So, the trade is still on the bearish side. Just be careful about it. Q: Is Reliance Capital a good looking chart? A: Yes, it’s a much better chart. It’s just making a fairly bullish pattern and willing to breakout. Assuming that we go through a one or two days choppiness and then resume the up move, Reliance Capital should be one of the outperformers. Today could be a choppy market. Q: If you do get intraday dips in the morning to below 5400 level or 5380-5390 would you consider making a purchase or you want to watch the market for a few minutes or a few hours before making any calls? A: No, I would probably watch the market for the day. I am not very sanguine about taking new bullish positions. Let the Nifty go up. It’s already proved it’s going up. Let it continue and then there will be lot of opportunity to go long. So, today probably is not a very good day.