Nifty in trading range; go and sell: Sukhani

Latha: Three days on a trot, we are ending lower. Would you dare to short today?

A: The markets are now willing to be a short-selling idea. The problem is one of tactics. Should you short after three days of such large declines or do you wait for a rally. That is a matter of personal choice but the market is a short sell. You can probably wait for some intraday rally and then go and sell.

Your stop loss is 8,800. The Nifty is still in a trading range. We had a false breakout on the upside when the Nifty went above 8,800. That was a bull trap, it was trapping the bulls and the market slid down.

However, support is repeatedly coming in at 8,500 so we are having a 300 point range. A big trending move will come when the Nifty crosses 8,800 or goes below 8,500. Inside the trading range the trade is still to go and sell because the banks are now giving us clear signs of distribution. I think that will affect the Nifty eventually.

Latha: Nifty at the moment at about 8,575, that is the first five minutes trade, is it good enough for you to short or you will wait for the rally to short?A:  A trader should probably split the trade, sell some part of their volume now and sell the balance on a rally, if it comes about which it could. But the important point is that these stops are wide. That is 8,800. A tight stop loss cannot be put.

We are inside a trading range. Markets can chop around. So, the view is that we should be looking at the bearish outlook but keep volumes so that one can manage stocks properly. Latha: What is the trade on the Bank Nifty, is it more tempting to short it now because it is in the green?A: It is much easier to short the Nifty because of its composition. The Bank Nifty is a short but for the Bank Nifty, there is no exit as of now.

What happens if we get this trade wrong? For me the Nifty is the easiest trade.