Sudarshan Sukhani of Technical Trends said that the 5050 Nifty level will not hold out and that the market may in fact head lower and test 4500 – 5000 levels.
Speaking to CNBC-TV18, he said that given the market environment and the repeated show of strength by the bears, investors must wait for a dip below 5000 on the Nifty. Sukhani advised investors to wait for the market to find a bottom.
Excerpts from CNBC-TV18's exclusive interview with Sudarshan Sukhani:
Q: Do you think 5,050 will hold out on the Nifty because it sort of got tested once on Friday?
A: It was. I don’t think it is going to hold out. The chances are that we will go down and test any level between 4,500 and 5,000. Anything is possible, but given the market environment and the repeated strength shown by the bears, it is safer to wait for a dip below 5,000.
We have had all this talk about buying. I must remind you that at this point of time the buy on dip strategy is not to be implemented. Wait patiently for the market to find a bottom. That has not happened yet.
Q: What about traders, what should they do? How should they approach trading in the Nifty, would a short trade work on every upmove or should they not be that adventurous?
A: It is possible. If you can do your money management properly, keep a stop loss, understand that gaps can go against you, a short trade at higher levels is a possibility. It is also possible to go long at a very sharp panic bottom, that’s probably a better trade, but both are possible.
Q: What looks like a good trading opportunity right now, to stick to taking calls with the Nifty or trading some of the midcaps or largecaps right now?
A: Trading some of the midcaps would be much more interesting. There are sectors that are in fact moving up. It is only comparative. For example in fertilisers, there are stocks that are actually inching upward. Then we have textiles. Then we have a lot of these so-called midcap momentum stocks that have been literally beaten down, Ashok Leyland for example. So, if the market shows even the slightest signs of strength, trading in these stocks would be better than going for the Nifty.
Q: What are you hearing from you HNI friends on Reliance Power and how are they approaching it this morning?
A: They are very nervous. Many of those large investors are hoping that they can get out. By that it tells me that it may not pan out the way they want it to be.
Q: What have you been spotting on the charts of stocks like Reliance Energy in any case over the last 7-10 days?
A: What we are seeing is that these stocks are going in on a long bout of consolidation. So based on those charts, Reliance Power doesn’t appear to be very promising in the near future, whether it is NTPC, which is out performing the other power stocks and that’s about it or Reliance Energy, or Tata Power or CESC to some extent. The impression is that they are going to go into a range and spend a lot of months in that range.
Q: Two brokerage stocks, if you track them, Motilal Oswal and Geojit, both down 20% to 12% over last week?
A: Between them, Geojit is probably a stock that could become a buying opportunity at some time assuming you want to go and buy brokerage stocks. At some point, even brokerage stocks will become attractive. That level is going to come soon enough. One more panic decline and real estate and brokerage could at least for the short term becoming interesting opportunities.
Q: If the market does slip below 5000 at some point, as a Nifty trader, what you would do, just wait for it to stabilise or start accumulating sub-5000?
A: No, I wouldn’t buy. This is not the right time. We have to wait for some accumulation signs to come in. That could take days. So as a Nifty trader, the trades would be, if there is a panic open in the morning or during the day, that’s a buying opportunity because if not anything, there will be a bounce in my favour.
Otherwise, similarly a sharp rally is a short-term selling opportunity. But there is no opportunity in just a steady soft open.
Q: 5,000 on the Nifty has sort of held out, would you take heart from it or do you think it will break during the day?
A: I am not sure about the day. But I think it will break sooner rather than later. I don’t think 5,000 is going to hold out now just because it’s a round number. So a trader can as well wait for a few hours or let’s say one or two hours. If this level holds, there is a buying opportunity. You never know what the market will do and one also has a stop loss, the 5,000 level.
But an entry without knowing where to get out would be risky. So it is much better to wait patiently and let this market bottom out. Sometimes the best trade is not to trade at all.
Q: One word on a space that has actually held out today, the sugar lot, would you be trading anything there this morning?
A: Yes I could be. Sugar, fertilisers and small textile companies, these are the three sectors that are on my list. Sugar, after that big battering is actually moving sideways. It is outperforming the market, it is relative you understand that if the market is down 10%, sugar is down 3%.
But that’s big news and the fact is that it ha been consolidating in tight ranges for the last 2-3 weeks. It’s a sector where buying would be justified. The slightest signs of an up market tick and sugar would be a buy for traders. I am only talking of traders.
Source: Moneycontrol.com
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