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Praveen Gurwani
Technical analyst, Sudarshan Sukhani feels that the Nifty is turning back from 3200. Sukhani believes that the markets are falling everyday.
According to him, even if something spectacular is announced by the Fed today, the markets will still not witness any impressive move. Going forward, Sukhani says that the markets are headed for a big downtrend.
Excerpts from CNBC-TV18's exclusive interview with Sudarshan Sukhani
Q: With the Nifty at 3,150, do you think we are turning from 3,200 again or would you want to wait for a day or two before you take that call?
A: It does appear that the markets are turning back again from 3,200 levels. For the last 3 days we had lower closing levels. So while, closing levels were a bit lower, the fact remains that we could not break 3,200 on a closed-only basis and markets are now falling everyday. The worldwide environment is again deteriorating and unless something spectacular happens today with the Fed, I don’t see this market actually going up.
So we are in an eight-day range, which is just a narrow range moving in 60-70 points, almost sinister. It gives me the impression that we are setting up for a very big downtrend.
Q: Take us through your outlook on the banking space because we have heard from the Boards last evening and we saw a bit of a bounce back, it that sustainable?
A: The fact remains that we are in a trading range and I am giving a call that this range is likely to break down. Assuming it does not break down, then banks should continue to outperform. We have seen that many of the banks have reached earlier resistance levels, which is also a point where they stop moving up. That is fair enough for banks, because it is a technical correction.
So if the markets again resume an uptrend or even remain steady, banks should cross their resistance and continue their upmove. So the sector as such remains positive.
Q: What would your call be on ICICI Bank? Would you see further uptake here?
A: I think so, infact both ICICI Bank and HDFC Bank are ready for an uptake. This is assuming that the broad market holds and behaves itself.
Q: Have you taken a look at Nagarjuna Fertilisers, GNFC and RCF?
A: RCF has nothing to comment on apart from the move that came yesterday. So we can leave that out. GNFC-Gujarat Narmada Valley Fertilisers Company- is the best of the three. Volatility is much less for traders in Nagarjuna Fertilisers. I would say that there is a buying opportunity in GNFC, it is building some kind of a base and is unlikely to be an outperformer, to go against the market. If the market remains steady, it’s a buy on dips.
Q: Concentrating on some stocks that saw good movements yesterday, Rain Calcining is one that has been on a role for a while now, so how would you play this stock now?
A: Yes, Rain Calcining is giving us some bullish signals. It’s making a double bottom that would be confirmed once it closes above Rs 39. The risk involved in trading this stock is pretty large because it recently made a low of Rs 27. So one has to keep a stop somewhere around Rs 31-32, which means that the 28% stop loss for a trader would be unacceptable. But if you are an investor then here is a pattern that suggests bullishness. However if you wanted to buy Rain Calcining anyway, then this is a good time to buy.
Q: Two stocks technically Patni Computers in technology and Balrampur Chini in sugar?
A: The BSE FMCG Index is displaying an extremely bearish pattern, and I have been upbeat on ITC, Hindustan Lever, Dabur. But looking at that chart, I think this is not the time to enter. It is front-running the Nifty; the Nifty has not broken down. The FMCG Index does give a suggestion that it is going to come down.
Balrampur Chini still remains one of my lesser favourite stocks; Bajaj Hindustan in sugar remains the best. The worldwide price decline for sugar is not over yet. So if at all anyone wants to go into sugar, Bajaj Hindustan remains the best bet. Balrampur Chini has corrected far too much for my liking.
I do not track Patni Computers.
Q: How is BHEL’s chart shaping up? Is it showing strength even now on the charts?
A: Yes it is. Infact the entire capital good sector has had a better chart than the Nifty or many of the other underperforming sectors. Out of them, BHEL has the best chart. So it is really the best of the best. I would say that it’s a stock, which, if one is lucky enough to see a dip in, or a small retracement, one should be entering that stock as an investor and as a trader.
Q: What would you do now; markets have had a 100-point rally. Do you use this rise or these gains to short the market or wait and watch and not make such moves?
A: Ofcourse there is no shorting right now because the market is in a range and there is always a possibility that we could see a breakout. So wait patiently. The Nifty level of 3200 is the crucial, because if the markets were to close above that, it would tell us that the market is going up. On the downside there is a narrow range. A close below 3115 will tell us that this is not working out. So within this 85 point range there is no trading possible. So it is much better to wait patiently.
Q: Two stocks which have opened up this morning; GE Shipping and Indiabulls?
A: Indiabulls is a favourite stock, I don’t own it but I like it a lot. It does all the right things and makes good patterns, now it is correcting. The chances are that whenever its correction is over, I would assume that it would go up. I think that over a period of time, it is going to make all time new highs, which means that it will cross Rs 300. So to me it is an investment grade stock irrespective of its background, good or bad.
GE Shipping is a little more confusing, it did begin to go up, and then it fell primarily because of news. But I would still remain upbeat on it. It’s a stock that traders could really trade in and buy.
Q: What is your call on the cement pack. We have seen India Cements get on to a good start similarly with some of the front liners. How parked in it would you be?
A: Not much, while cement remains upbeat and it is in my strong sectors list, at current levels all of these stocks are now touching resistance and finding it difficult to move up. So irrespective of what happens on an intra-day basis, I would assume that these stocks would go through a minor correction before they begin again. So for the next one to three days I would stay away.
Q: How much more do you see ICICI Bank rallying from here?
A: That is difficult to answer. If the market does not support it then there is going to be no rally. But if the market does support it then touching Rs 600 is no big deal for ICICI Bank, the way the patterns are now beginning to emerge.
Disclosures:
No disclosures, I own a lot of midcaps.
I want to discuss two more stocks, the first is Reliance Industries, which is making an extremely bearish pattern that gets confirmed when it closes below Rs 950, that is a worry. Reliance is a bellwether stock.
The second is Zee Telefilms, it has been in a consistent uptrend. I find Zee making a pattern that comes at intermediate tops. So one should be a bit careful about this market.
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