We saw Reliance move up yesterday and this is going to happen to a number of defense stocks.Sudarshan Sukhanis2analytics.comTechnical analyst Sudarshan Sukhani of s2analytics.com is upbeat and bullish on indices since the Nifty has decisively broken a long trading range.
He suggests that this is not the time to short and one should go long. "Also look for intraday trades on long side," he added.
Below is the edited transcript of Sukhani’s interview with CNBC-TV18.
Q: What is your sense on index this morning?
A: My sense on the index remains upbeat and bullish. We had a decisive breakout from a long trading range and that is always to be respected. So the trade is to remain long, not necessarily getting out in a hurry. Also look for intraday trades on long side. This is not a time to go short.
Any day the market can go up and catch the short sellers by their neck, so the trade is almost very clear. We saw Reliance move up yesterday and this is going to happen to a number of defense stocks.
We cannot name them now because we do not know which one will pickup or be picked up and pushed on the upside. But, that is going to happen.
Q: What kind of targets do you see on Biocon ?
A: Biocon’s immediate intraday short-term target is Rs 260. Biocon, after a significant rally from Rs 200 reached Rs 260 and then consolidated. That consolidation should be resolved on the upside. Yesterday it saw big gains and that suggests that this is a consolidation and not a distribution.
In any case most stocks in this market are following the Nifty and if that is so then it’s not the immediate target. Once it crosses Rs 260-265 threshold then Biocon has the potential to add significant momentum on the upside. So, day trader should look for further gains today or build a position and maintain it.
Q: You would look for further gains in DLF after the 2% up move yesterday?
A: Yes, although I heard you say that DLF has been downgraded to Rs 165, at least in the short-term the charts are mimicking the Nifty. The Nifty has made a bullish pattern and broken out and DLF did the same.
So, I would be upbeat on DLF. I would look at Rs 225 and say it could go even higher. Once momentum builds in the market a lot of things are just brushed aside.
Q: What about Coal India ? Is that a weak looking chart to you?
A: Coal India should have been a good chart. It has made a distribution and it is not going up. Yesterday it should have gone up but it did not. It has already broken down from distribution. I have already explained that this is not a good time to go short.
So, the message here is that you short Coal India only if you want to create a hedge of some kind to your long positions or simply avoid it till it reaches Rs 320-325 where it would become an excellent buy again.
Q: You have a buy on Axis Bank for the day?
A: ICICI Bank and Axis Bank have been favourites. Now, I am adding HDFC Bank to that list. Axis Bank is on the verge of a breakout on the upside. The Bank Nifty has not done that. Bank Nifty was usually leading and we heard Udayan say that it’s not done it this time. But that doesn’t mean it cannot do it.
Axis Bank above Rs 1,060 then moves into un-chartered territory for this uptrend. I would be upbeat today. I am assuming that the banks will catch-up and also lead at least for the short-term period in the next few days.
Q: You think L&T is headed above Rs 1,400?
A: I think so. It made a narrow range yesterday. It did not participated in as much of the Nifty rally as it could have but that should change. In any case if the Nifty suggesting signs of bullishness then a lot of the heavyweights will eventually do their breakouts, do their momentum driven upswings.
L&T is well suited for that. Now at this point L&T is a better buy for short-term traders than BHEL.
Q: You have a sell on HPCL ?
A: The oil marketing companies do their own thing. I sometimes have confusion about what is going on and whether they have any relationship with the broad market and it doesn’t appear that they have. This is a short sell even today which means its one of the rare short sells in a rising market.
The charts of HCPL, BPCL and IOC have broken down from their tops. There is an intermediate decline that they are going into and we should be able to sell it.
Q: How would you trade Wockhardt today?
A: One can still trade it and go long in it but not necessarily today but whenever one see some kind of a consolidation. These stocks are telling that they are not stopping at this level. They are likely to go much higher. So, the trade is on the long side but avoid it for the day.
Q: You track Bombay Dyeing closely?
A: Bombay Dyeing has completed its correction. That correction has led to big gains yesterday. Once a pattern is seen of higher highs-higher lows which is what Bombay Dyeing has done then one can assume that it’s in a bull market of its own.
So, the trade here is to buy - rather than go for day trade in Bombay Dyeing. People who want to take positions for few weeks would be much better rewarded.
Q: What about Balrampur Chini from the sugar space?
A: The trade is still to go up. We have been upbeat on sugar since last week and that’s paying off. Even now on any dip, consolidations buy Balrampur Chini and Shree Renuka Sugar .
Q: What kind of targets would you have on Reliance Industries ?
A: Reliance target is about Rs 850. That is quite good because that means there is much more headroom still left here.
Q: You expect more traction in Sun TV ?
A: It does appear so, although it’s not a favourite. So, given the choice I would not buy Sun TV. But on the charts it shows that there is probably more traction.
Q: Would you buy Reliance Capital ?
A: I would. Reliance Capital seems to have made its bear market low around Rs 270-280 levels. Now this stock is likely to move up. It is going to be choppy, the first initial leg is always difficult but I would be a buyer in Reliance Capital.
Q: As a strategy would you advice naked long position in the market now or do you think some protection is prudent at this level?
A: Futures position is what you are refereeing to is good enough or deep in the money call, which is what I have is like a Futures position with some minor inbuilt protection, that is also as good.
I would advise people to go headlong in the long positions rather than try to hedge. This market would go 200-300 points higher. There is no sense in trying to hedge and reduce your gains.
Q: Where would you keep a stop loss on that long trade?
A: That is still 5,200. That is now an important level. If the Nifty were to slide below that I would say the charts are wrong or my interpretation is wrong.
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