Sudarshan Sukhani of s2analytics.com spoke to CNBC-TV18 of where he sees the Nifty going today and gave his strategy to play the market today.
Below is the edited transcript of the interview. Also watch the accompanying video.
Q: Do you expect to see more follow through after two days of a sharp move?
A: Yes, it seems so. We should end the day higher than where we were yesterday. That would also take us to 4800 which was a target for this rally to begin with. The markets when they develop momentum can go higher. So short term traders have a good positioning on the long side and they should maintain it.
Q: Yesterday, the disappointment in a rising market was Idea Cellular . You still think there could be lower levels even from here?
A: I think Idea is still moving lower. At best, it will become choppy if the market sees a rally. Maybe it will fall even inside a rallying market. So initial target is Rs 75, but I suspect eventually it will land up below Rs 70.
Q: You were just talking about a buy report on Lupin . Technically too that looks good to you?
A: Lupin made a new low just five days ago, along with the market. Since then, it has bounced back. So it’s not a trade that we say has conviction in the sense that the trend is up; the trend is not up, but it is just changing to up. If we buy Lupin and if we are right about the change of trend, we are actually buying almost at the lows of this correction. So Lupin is a buying opportunity. On a much larger time frame, it’s a very strong stock.
Q: There is a buy report on NTPC as well - you like that one too this morning?
A: NTPC has made a double bottom. It hasn’t confirmed that pattern; in fact, a lot of stocks have begun to make those patterns but without confirmation. However, if we are right on the fact that momentum can be on the upside for a few days, we are literally buying NTPC at the previous lows of Rs 159-160. A rally to Rs 170-175 is possible. So NTPC technically is a buying opportunity. The key here is that assuming, I don’t think that will happen in a day, but assuming the market collapses, you have to get stopped out. You don’t wait and find out what happens next.
Q: You have two auto stocks on your buy list- let’s talk about them. You like Tata Motors for a while, right?
A: That’s right, it’s an amazing chart. While the broad market was falling, Tata Motors was making a trading range at the higher end of its price levels. That’s quite interesting. It has been a distinct outperformer. Again, I don’t have a reason why, but this is a stock that is on the verge of a breakout from a small trading range. That will take it to Rs 208. Outperformers would remain outperformers, so Tata Motors is an excellent day trading, an excellent swing-trading opportunity on the long side. Put it in your list.
Q: The other sell in your list today is Havells .
A: Havells was a disappointment. It rallied, so it was primarily in a bear market. But now, it gives the impression of confirming a double-top pattern. That tells us that a deep correction is possible here. It’s on the verge of breaking down. Today or for a couple of days more, I am not sure, but if it breaks down today, we can expect a significant downside in Havells. It’s worth making a short sell. We already have a stop loss. That means we are protected. But it could go for a much lower level.
Q: Maruti as well from the auto space, you have got a buy there.
A: Maruti made a low at Rs 900. Then in this current dip, it came back to Rs 900 and found support there. It’s not a high conviction trade, but sometimes, it’s worth taking because if we are buying Maruti at these levels, Rs 950-960, we are actually buying a double-bottom at a fairly low threshold. So a reasonable rally can be expected. If we are wrong and we will be wrong if the market suddenly reverses, then we have a stop loss. Otherwise, the risk-reward ratio is excellent now in Maruti. A rally can take it all the way to Rs 1008-1010, and then maybe to Rs 1100. All this is conjecture, but some money can be made on the day trading.
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