In this special series of Charts 2017, Sudarshan Sukhani of s2analytics.com is mapping the technicals for 2017.Below is the verbatim transcript of Sudarshan Sukhani’s interview to Anuj Singhal, Latha Venkatesh & Sonia Shenoy.Anuj: Let us start with the Nifty because 2016 was so volatile, we were in a 2,000 point band almost. Do you think the band will narrower at least?
A: Before I give you the outlook for 2017 I must explain that the views are now based on what we see the market today. In 2016 many experts would have given their views but no one imagined that the currency would be demonetised, no one imagined that Donald Trump would become President or even that Brexit would actually take place. So, my point is that we really don’t know the future; we are only discussing what we can perceive today.
Therefore, with this caveat I have to tell you that the Nifty is likely to be in a narrower range that is pity because last year was narrow by itself. The chances are that we have lower end of the range somewhere around 7,600-7,700 which means that the Nifty has the possibility of going and testing those levels sometime during the year probably in the early part of this year and an upper end at 9,100, which was the previous highs. So, 2017 could easily be a year of consolidation.
The view is mildly bullish because the downside seems to be limited to 300-400 points and the upside is open to 800-900 points and of course if in the last part of this year we break above 9,100 then the end of the year could be spectacular.
Currently, the Nifty could be in a trading range with a bullish bias. The actionable idea from this bullish bias is that we should be buyers on dips.Latha: Before I ask you what would you buy on dips let me get the other chart as well the Nifty Bank?
A: The Nifty Bank is disappointing and this is just to tell you how little we know of the future. In the morning almost all of us were bearish and the market have confounded us by actually the Nifty Bank going up 100 points as Anuj was saying. So, the future is really uncertain. However, within that uncertainty the charts for the banks are not at all conducive for any kind of rally.
The best case scenario for the banks could be that they could consolidate even more than the Nifty and not go down. The risk of a decline in the Bank Nifty in individual public sector undertaking (PSU) banks is significantly higher than in other Nifty stocks. So, I would be avoiding the Bank Nifty except for buying for small gains only and that would happen during the year.
Sonia: Let us talk about the commodities gold or silver which one will give you more gains in 2017?
A: The chances are that both gold and silver will be in some kind of consolidation. Here also the view should be to buy on dips because 2017 is going to reward people who are willing to take risks and risk on the long side of the market. So, the gold has a trading range between Rs 25,500 per 10g approximately to Rs 30,500 per 10g. Five thousand points is a lot of money to have trade inside.
Gold would be a better opportunity as compared to silver. Silver’s trading range could actually become narrower. Therefore, I would say that gold is the preferred choice for trading. Every time you see one monthly or weekly dips, it is a buying opportunity. Don’t expect big gains.Anuj: Your big bet for 2017 seems like Reliance Industries. It is one chart that has flattered to deceive for five or six years now almost every time we feel that this is the real rally in Reliance and then it fizzles out. Do you get a sense that this time it is different?
A: As you said every year perhaps we think that this time it is different. However, it does appear that for Reliance this time it is going to be different. It is a largecap the chances are after a seven year consolidation it is on the verge of breaking out above Rs 1,100-1,120. I think everyone should be positioned by buying Reliance as an investing idea. If the breakout happens then you could keep on trading on the buy side, on the long side in Reliance throughout the year. Reliance could be the big name of the year and I would still say be positioned as an investor, don’t wait.
Latha: Outside of Nifty what is a great stock chart to watch?
A: I would assume there are plenty, but I would suggest NMDC. NMDC had a big bear market that lasted for years - that bear market is ending, a very significant accumulation is going on in the stock; it felt from Rs 300 to Rs 90, so it has a lot of potential for going back and significant percentage gains can be forthcoming.
I have investment positions in NMDC but that is not the reason, the reason is that it is one of the better charts for this year. It also covers metals; it covers the stock that is willing to bounce. It is a PSU; it has everything going for it.
Sonia: The dollar index is something that everyone is tracking these days to get a sense of which way emerging market currencies could go. Do you expect further strengthening beyond that 102 mark?
A: I think so although I would assume that Latha is far better poised to answer that question. The charts suggest that any instrument whether it is commodity or a soft index or anything else that is making lifetime new highs persists in doing so and the dollar index has broken out of a long congestion, a long trading range, so the chances are it has much higher levels to go to which means for us even though the rupee could outperform 70.50 to the dollar seems to be very likely sometime during the year.Latha: What about the mother of all equity charts the Dow - whether you want to follow the S&P 500 or the Dow - that index is of course at all time highs, very close to it. Does it go on that way? 2017 is a big year for Wall Street indices?
A: Let us consider S&P 500 as the mother of all. It is much wide, bigger and more tracked index. I think there is more upside there and at least for the first half of this year and the very fact that it is at lifetime high, it is in a trading range and probably breaking out of that range on the upside suggests that the US market will be robust and continue to notch gains. Last year they had gains of 10 percent. It is difficult to say that it will match those gains, but I don’t see any weakness in the market which means the US market could remain an outperformer.
(Disclosure: Network 18, which publishes moneycontrol.com, is a part of the Reliance Group.)
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
