According to Sudarshan Sukhani, investors should not look into buying unless the Nifty closes above 8300 in today‘s trade.
In an interview with CNBC-TV18’s Sonia Shenoy and Reema Tendulkar, Sudarshan Sukhani of s2analytics shares his outlook on top trading tips for the day and where the market is headed hereon.
According to him, the downfall after the rally witnessed by the market in yesterday’s trading session was a mere correction. Correction seems on the upside, whereas the trend seems downside, he adds.
Going ahead, a deeper correction is underway and therefore he advises investors to be on the short side of the market. Furthermore, he says investors should not look into buying unless the Nifty closes above 8300 in today’s trade.
Below is the verbatim transcript of the interview:
Reema: What would be the call on Nifty now?
A: Yesterday sharp decline has suddenly changed the picture for the Nifty. What was apparently and ongoing uptrend, now seems to have stopped so the rally that we saw after that big decline was a correction in a downtrend. It is confusing. From 8,600 we started the first leg of a down move, at 7,900 that leg came to an end and we corrected that leg. So the corrections are now on the upside and the trend seems to be on the downside. Yesterday’s price action was not conducive. This kind of a price action in a bull market tells us that a serious correction is coming. Today could be a relief rally, this relief rally could extend for many days – that’s a different issue but the trade if at all there is one is to be on the short side of the market, not on the long side. The market now has to prove itself, give affirmative action and say I am going up, till it does not do that we will assume it is coming down and a deeper correction is coming.
Sonia: That is a big deviation from what the stand was earlier, are you ruling out a pre-Budget rally completely and since you did say that a serious correction is underway, what could be the markers to watch on the downside for the index?
A: It is a serous deviation because the market acted very unusually and seriously yesterday and it was a v-shaped change. This normally does not happen; normally the market distributes and then we get a sense that a top is coming but it was not like that. It was a sharp and sudden decline and it is not as if we outperform the world market. We went with them, in fact underperformed. So all said and done the markers are that we will start looking at a bullish scenario if the Nifty closes above 8,300; we will start looking at the price patterns at that time. Till then we are not looking into any kind of buying except for nothing on the buy side. What is the downside then? If this is a serious correction then at some point we could break 7,900 and go lower.
Sonia: You have a sell call on Housing Development and Infrastructure (HDIL)?
A: HDIL is a part of real estate pack. It is doing poorly in terms of price action. HDIL is not conducive to be going up. The price charts are that it had a small rally – that rally had already faltered out, now it is short selling idea. The downside maybe limited because the price itself has come down but still there is some money on the downside in HDIL and probably in all the real estate stocks.
Sonia: Hindustan Unilever (HUL) is a buy call today?
A: Yes, HUL has been an outperformer. It is probably going to do well. No matter what the market does, I would buy it.
Reema: You have a sell call on JSW Steel. What would the target price be?
A: JSW Steel has been a distinct underperformer, so look at Rs 980 or something but metals are going down.
Sonia: You would buy Coal India today?
A: Yes, it’s a positional trade also. It is breaking out of a bullish head and shoulder. So you not only buy it, you keep it for sometime.
Reema: You are also recommending a sell call on Shriram Transport Finance Corporation?
A: Yes that is a pity because non banking financial companies has been a favourite not only for me, for this market but Shriram Transport Finance is a short sell, much deeper meaning on the chart is that it is making a bearish head and shoulder and willing to breakdown – that’s bad and that tells us that NBFCs are likely to go through a deep correction and that’s the sense I am getting now. It is a sudden change in chart patterns but that can happen.
Sonia: You have a sell call on Godrej Industries and a follow-up on Shriram Transport, since you are bullish for the longer term, for long-term investor, is it good time to buy if it dips further?
A: For long-term investors any blue chip is a good time to buy. If it dips further then just be patient. We are in a bull market; we are only talking of short-term corrections.
Godrej Industries is at the lows of so many weeks and it is willing to break a small trading range on the downside, so it is a short sell.
Sonia: You were recommending a buy on HUL, at what point would you advise taking profit or do you think that one should just let this run?
A: For a short-term intraday trader we had a target of Rs 780-785 and that is the point at which you should take profit. If one is anything more than an intraday trader then let it run.
Reema: If someone wants to take a short call on the Nifty, would you recommend it at current levels or do you think that the market could bounce back and give it a bit more buffer and then take a short position on the index?
A: I think we should let the market do what it wants this morning. We had a very big decline yesterday; the context is that there could be a relief rally, after all this is a long-term bull market. Let the relief rally prove itself, if yesterday was a one day event, the market will takeoff. If it does not then that will be the point to go short.
Sonia: Any stock you want to trade on the long side today?
A: Ashok Leyland is a buying opportunity only intraday. Once we are certain that our trend is on the downside, which is what has happened then trades on the long side should be taken with caution. We are only discussing intraday trades today. Ashok Leyland is a buying opportunity and in anticipation so could Infosys be.
Disclosures: I do not have positions in the stocks we discussed.