The trade is that at 5,250 a close above that tells us that this market momentum has turned to up. A close below 5,200 would have told us the opposite. Sudarshan Sukhanis2analytics.comTechnical analyst Sudarshan Sukhani of s2analytics.com expects Nifty to close above 5,250 today, so he suggests taking some long positions from the start of trade today.
Nifty's close above this level would be indicative of a bullish pattern and an upside trend, he added.
Below is the edited transcript of Sukhani’s interview with CNBC-TV18.
Q: What's the outlook on the Nifty this morning?
A: The outlook was a little muddied last week when we said that you buy calls and buy puts, the market could go anywhere. The important point was that it will go somewhere. If somebody has followed that advice and taken only intraday trades in the direction then today we should be owning some calls and some puts, which are likely to lose value.
But the trade is that at 5,250 a close above that tells us that this market momentum has turned to up. A close below 5,200 would have told us the opposite. That below close hasn’t happened. Chances are that we might well close above 5,250 today. If that happens then we should be long. The trend is then on the upside. It will also confirm a mildly bullish pattern.
So, we have to take this a day at a time. Since we have to go with the trend, the trend is expected to change to up today on a close above 5,250. Some long positions should be taken from the start of the day.
Q: Does chart of Divis Labs also look good?
A: The charts look fantastic. Divi’s Lab has been making new highs and then consistently doing it, not just going up and then eventually retracing. So, here is a chart and here is a stock that says ‘I am willing to go up and the market is willing to support that rally.’
There is a lot more buying here. Today, there will be a gap open of some kind. But then on intraday dips, on intraday rests it is a buying opportunity. It is not likely to stop where it opens.
Q: Which stock would you buy from the banking space?
A: I have been favouring ICICI Bank and in all fairness it has rallied the best in the large cap banks. That remains a favourite. On Friday it closed lower. The chances are that that was some kind of a correction that’s coming to an end. Today it should close higher, open higher.
At the open after the first cooling off period of 15-20 minutes or later in the day, the stock becomes a buying opportunity. The chances are that it will cross Rs 1,000 and go up. If the Nifty moves up, ICICI will outperform.
Q: What about Bata ? Do you think the pull back post result is over?
A: Bata made those new highs which it has been doing on Friday. That was when the markets were a little confused. Those new highs also confirmed a bullish pattern, some kind of a continuation of the uptrend and that gives a target of Rs 1,050 now. That’s fairly ambitious, that’s 15% up. But Bata has been doing the right things. Bata is now still on a roll and there is much more upside.
Q: You have a buy on Jain Irrigation this morning?
A: If this market is going up and it could well be, so we are just following the momentum. If it doesn’t go up we’ll have to suffer that setback. But if it is going up then midcap stocks are going to go with it and certainly probably outperform.
Jain Irrigation has completed its bear market. It made a double bottom, rallied, then it went through a very sever and sharp correction after the rally. That’s good news because we can buy it lower.
So, around Rs 75 where it stands now, Jain Irrigation has completed a correction and it is probably going to resume its uptrend. This could be a significant up move. So it is not just a day trade. If the trade goes in our favour, we should carry it on.
Q: You have a sell on Reliance Power ?
A: It is a miserable chart. It shows nothing. It keeps on rallying, the rallies are small, they are very intermittent. Even in terms of time the rallies are not sustained and keep on falling.
The reason why I still have sell is that assuming that the market will open up, there will be some opportunities of selling in that strength and Reliance Power is almost the perfect opportunity.
So, once the stock stalls, it is possible to take a short position even as the broad market goes up.
Q: You also have a sell on BPCL ?
A: That’s a very disappointing chart. It had a straight line decline, didn’t stop at all. And now after that decline it is on the verge of a major breakdown on the downside.
Whether that happens or not, the trade again is that if there is a gap up, if there is some strength in the stock, that strength should be used to go short in it.
Q: What would you do with Shree Renuka now?
A: Shree Renuka is a buy. It has been referred to as a buying opportunity earlier also and that holds. So, there are modest smaller short-term targets of Rs 35-36 and an eventual target of Rs 40. That applies to most sugar stocks.
Q: What is the chart of Glenmark telling you?
A: Glenmark is telling us that the bear market in the stock is over. It is now moving up. It has been moving up consistently and it is almost doubled itself. At current levels there is again a buying opportunity. There was a big move on Friday, it is probably a continuation. So, we should expect higher levels to come. Buy on any intraday dip.
Q: What about Dishman Pharma ?
A: Surprisingly Dishman Pharma is also in the same league as Glenmark. Apparently the bear markets in a lot of these midcap pharma companies is done with, it has been making higher highs, higher lows, made a very big gain on Friday. Those gains are going to be built upon.
It does appear that the Nifty is going to close above 5250 for all we know. If that happens, a lot of stocks will move up.
Q: How is the chart of REC ? That looked weak on Friday?
A: Yes it did but I would assume that this is a minor correction in an ongoing uptrend. REC has a very decent chart as does PFC . So Friday’s correction should be bought into. Here is a stock that’s actually corrected. I wouldn’t worry about that dip.
Both these stocks are likely to move up. REC has a very immediate target of Rs 205-210. But eventually I think it will go back to its Rs 250 levels.
Q: Would you buy Marico on dips?
A: No I would not. Marico has seen a very decent rally. At some point Marico becomes a buying opportunity. Fortunately we can't short sell it. I say fortunately because that would be an unwise act. We wait patiently.
Marico for somebody who is a short-term trader is a sell. It should slide further till it finds support somewhere around Rs 180.
Q: How would you approach the opening at 5260? Would you open up a fresh long here?
A: Yes, I would open up a fresh long looking at a target of 5400 and a stop loss at 5200.
Q: What do you think of Mahindra Satyam ?
A: The charts are saying it is going up. So, that’s fine. But I wouldn’t trade in it. There are so many other midcaps available which are more attractive in the IT sector.
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