After yesterday’s 150-point bump up on the Nifty, Sudarshan Sukhani of S2analytics.com expects a fairly choppy market today with a mild small downward bias. He also mentioned that the monster rally like yesterday might stay at least for a couple of days or more.
Conveying that the market breadth is poor, Sukhani suggested a sell on Tata Steel , not only for today, but also on every rally. However, he feels HUL is a good buying opportunity.
Here is the edited transcript of his interview to CNBC-TV18. Also watch the accompanying videos.
Q: Do you expect to see a follow-through today?
A: No. We had a monster rally yesterday and it will stay that way at least for a couple of days or more. I would expect fairly choppy markets today with a mild small downward bias.
Q: You would want to take profits in the longs you might have carried on overnight as quickly as possible today. What would you do?
A: Half the positions were carried. Now, it seems that we will get out in the initial few minutes of the open irrespective of what the price is.
Q: You have got an equal number of buys and sell today. The topping your sell list is Tata Steel. What kind of levels can it get to?
A: Only in the F&O segment, there were 25 new lows when we had 160-point rally. There were 25 new one-year lows and Hindustan Unilever was the only one with one-year high. So, the market breadth is poor. Tata Steel is part of that new low group. This is a stock which has been falling on a day when it should have not. The pattern targets are so lower that they cannot be discussed. It’s just breaking down. Tata Steel is a sell on every rally.
Q: Conversely, Hindustan Unilever will be a buy. What is the strategy there?
A: Hindustan Unilever is a buy. It’s amazing how strong stocks will refuse to go down. Now, it is pushing against that Rs 400 levels. It has closed above Rs 400. Any sense that the Nifty is going up or nothing is happening can take HUL to Rs 410 or even Rs 411 higher. Keep a tight stop loss. If it’s not working, you would not want to stay in it. HUL is a buying opportunity
A: Yes. Infosys is in a trading range. Inside the trading range, it bounced lower and went below Rs 2,700 levels. It rallied very handsomely yesterday. For the intraday trader, at current levels of Rs 2,743, we are looking at 1-1.5% rally which could easily take the stock to Rs 2,780-2,785. But, Rs 2,780 levels will also ensure that it breaks out of a small range. A person who carries forward could consider doing that.
Q: You have picked up an interesting stock from the media space Zee Entertainment . What would you do with that one?
A: I would sell it. It’s one of those stocks that have completely failed. It has started making bullish patterns and has failed like most of the other midcap stocks in its follow-through. For the last three days, it has made a fairly bearish pattern that suggests that significant downside is expected till Rs 112 levels where it had made an earlier low. This trade should find support only at Rs 112 levels. If Rs 112 breaks, then Zee will be in double digits.
Q: Another stock which was falling in a rising market yesterday was HOEC . How do those charts look?
A: HOEC was Rs 200 plus and was much higher at some point. It is falling and not stopping its decline. It’s making those new one-year lows, which is not good. This stock fell on a day when everything went up. HOEC will probably go much lower. We have a small modest target of Rs 84, but for a position trader, HOEC is likely to go lower than Rs 84 or even lower than that. This stock is a short sell on a choppy day.
A: Its one of the better stock among the metals. It was in my buy list earlier also. If the market falls, these buys might not work, but if we expect the markets to remain where they are, then Hindustan Zinc is a far better opportunity to go long in metals than anything else. This stock closed higher yesterday and is making a trading range for the last five days. It did not fall last Friday when the market crashed. The chances are that it could go up and see at least Rs 125-126 levels, where resistance should come in.
Q: Would you like to cut your longs early in trade or would you wait for some degree of stabilisation or even an attempted up move?
A: The attempted up move can come, but I will not wait for anything. The half of yesterday’s long positions will be cut almost immediately after the first one minute or so. This market is opening soft. We are looking at some kind of downward pressure today. Whatever we have got from yesterday long positions should be retained.
Q: There was a suggestion that we may have even seen the end of the relief rally yesterday at the high of 4,700 levels. Would you agree with that or is it too premature to draw that conclusion?
A: It’s too early to draw that conclusion, but it’s a possibility that we cannot ignore. A rally need no go up when a market goes through a correction. This correction can be in the opposite direction, in this case up or it can be sideways. If there is a 50% possibility that we can now become choppy and move sideways, and this sideways can be the correction expected from any trending move.
A: I would expect 4,550 levels on the lower side, which is where the low was made, and somewhere around 4,750 levels, which means we would be shy of 4,800 levels.
Q: Would you take any kind of a trading position in the midst of this expected choppiness? Do you have any fresh trade today?
A: No, it’s not a good idea. Since we are acting traders, there is a trade which is to buy somewhere around 4,630-4,640 levels and then wait for that 30-40 point bounce which can come intraday. It’s not a very good trade, so it’s not well advised. If taken, it would be taken with very low volumes also.
Q: What do you make of the chart of the Nifty because that seems to be stating the day strong or weak and then strengthening a bit? Do you think 5,420 is the intermediate top for now?
A: Yes, 5,420 levels is an intermediate top and the new bull market would be called only when we cross it. As of now, it’s quite far away, but markets can do anything. We are in a bear market. We are only seeing whether relief rallies can go higher beyond X-Y levels or whether we will just become choppy and move sideways, but the trend is not in question at all. This market normally should move lower.
A: Yesterday’s charts suggest that we should be buying it, but today is a different day. Buying should be done in the Nifty only after the index falls 30-40 points from its open. Similarly, Reliance remains a buy for intraday traders only, but only after it goes through an intraday correction.
A: Ambuja has been in a buy list earlier too. Ambuja remains a buying opportunity. There are strong stocks which we should not consider going short. One should try to go long, preferably on a dip and you could see a target of Rs 164-165 levels for the very short-term. This is one of the stocks you want to accumulate as a trader.
A: At Rs 50, I don’t even know what to do with it. If at all there is a trade, it’s on the short side. One should sell it.
A: Yes, it had one of the better charts in infrastructure, but it is breaking down. It has not done as badly as some of the others have, but that is a very small consolation. We can see Rs 125-128 levels on the lower-end. Today would be a short selling opportunity for almost all infra-related stocks and IRB comes in that.
A: At Rs 100, a lot of our friends said that it’s very good and should go up. Now, it’s half and there are chances that it will go to Rs 48 and then Rs 41. We see a significant downside in most midcaps because some of them are just breaking down.
Q: What about Exide , which is a better quality stock? This stock had been too grinding lower over the last many months?
A: It has become half of what it was. It was a better quality stock. Six months ago, it use to come in buy lists and there was a sense that the worst is over. Now, it’s not as bad as infra and some of the other midcaps, but it’s a sell. The chances are that it will go into double digits. The short-term target is Rs 95 levels and then may be below Rs 90 levels. Once these stocks start falling, there is no stopping. The broad market is also helping on the downside. A bear market pushes prices down.
A: It’s the least preferred stock in the auto sector (two-wheelers, three-wheelers, four-wheelers and everything combined). You shouldn’t be considering buying it in anyway. Either one should short sell or step aside.
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