Technical analyst Sudarshan Sukhani believes that the market is in an uptrend and there are no signs of exhaustion.
However, Sukhani opines that the market risk will increase everyday as the market continues to move upwards.
Sukhani further adds that this is a good time to book profits for investors.
Excerpts from CNBC-TV18's exclusive interview with Sudarshan Sukhani:
What is your sense, do you think we will just consolidate, pause, go sideways for a bit and then take out 12,000 convincingly? What are the charts showing you technically?
As of now, the market is clearly in an uptrend, there is absolutely no sign of exhaustion. The charts indicate that we are moving up and that should be acceptable to me. Yesterday after many days, we saw the Nifty actually make a pattern, which may be some kind of a short-term reversal.
The pattern was made almost exactly around 3500, which was our target and so we had a target and then a pattern, which could suggest a short-term reversal. So we could see a sideways move but there is no sign of a downside reversal now.
As it does that consolidation, has it set out a clear band for itself?
Well, it is not clear yet. So on the approximate side we have about 3410 and 3500 roughly, which is fairly wide, about 90 points. If it does consolidate then we will probably get a smaller or narrower band, but as of now we are really talking between 3400-3500 for convenience sake.
If you had long positions on the Nifty would you consider lightening those positions up a bit given the resistance the market is facing now and if not, then what kind of stop losses would you keep?
I would consider lightening it up and that is what we have been advising for the last two days. We have reached a pattern target and for all I know this could keep going up but now market risk increases with everyday when the Nifty moves up. So there is no purpose in staying with high-risk positions. These particular trades, which went long at 3000 or 3100, have been very rewarding.
Anyone who entered midstream also has been rewarded. So this is a good time to take profits not only on the Nifty but also on the individual long positions for traders and it is a good time to take profits for investors too, they cannot get the top anyway, we have had a 600 point rally nonstop and while we could go on, it is a wise idea to take money back. If you still hold Nifty long positions then my stop loss would be 3400.
If you take the call that this might be the last wave for the Sensex, has the base though gone up for the market after this entire upmove we have had?
Now that's a big 'if'. If I take a call that that this is the last upmove for the Sensex and the Nifty, then what could come after this would be a devastating bear market. So the base has not gone up, we could as well see 2600 in the Nifty or 8800 in the Sensex broken. That's a big if, we are all talking about conjectures.
Have you taken a look at some of these power stocks --Reliance Energy, CESC or even PTC?
Yes, I have. CESC has just broken out yesterday. Reliance Energy is doing a good thing, it's moving up after having fallen a lot and building a small base. I haven't taken a look at PTC. But the sense in energy stocks is that probably they have more upside and for some of them, the worst is over.
What about some of those infrastructure plays like JP Associates, Gammon, Era Construction, IVRCL? For last couple of days they have also been quite lively?
Yes, infact some of them are making nice patterns. There are lot of midcap stocks building bases, they have been building bases for the last 2 or 3 months and are now eventually slowly breaking out. So irrespective of how further the Nifty has gone from its lows, these are midcaps, which are giving us a message that they are now ready to go up. Gammon is part of that group, so also is JP Associates.
What do you think of TVS and Ashok Leyland?
Ashok Leyland has done its bit; I feel that it's now reaching a point where some resistance is likely to come in. So people who had bought at lower levels should probably take profits and just wait for either a consolidation or a decline.
TVS has moved up, it had built a based, I am a little more upbeat on TVS, irrespective of the margins, I really don't know much about that. But I think the charts are telling us that it went through a very deep retracement and while it may not reach Rs 200 again, there is a lot of potential in it to move up.
What about autos generally, even frontline autos like Tata Motors, Maruti, Bajaj Auto have been showing some strength. How would you trade them?
Well, I would just threat them as part of the move that the Nifty is doing. They are not outperforming the Nifty; any consolidation is a buying opportunity, either on a breakout or even inside that consolidation with a small stop loss. Of them, Bajaj Auto seems to be getting ready for a big move.
When do you go long again, you said you were lightening up positions, what would convince you, what level or what internal would convince you that the markets have now taken out another level and is ready to go take out the new high or old high?
Ideally if the market consolidates for a few days then we start getting those resistance and support bands, and then a break out of that resistance band, wherever that is 3490-3500 would certainly be a convincing move and that would tell us the resistance is now broken.
On the other hand if the market simply dips, doesn't go sideways, goes down for 2-3-4-5 days then that would justify buying position with a close stop loss.
The third scenario is that the market simply keeps going up; in that case I would stay aloof because then there is no entry opportunity.
Do you like anything in midcap pharmaceuticals because that's a space where a few stocks moved yesterday?
Yes they did, but I don't think this is a good time to buy them. It's much better to stay away from the pharma sector in general, I am very upbeat on that sector, it has done its bit, I would feel that it's going to correct and rest for the next few weeks.
On the flip side would you buy anything in midcap technology because some of them have been making moves -- Polaris, Patni, MphasiS BFL?
No I would not, there are a number of other midcap stocks that are suggesting break out opportunities but most of the IT stocks have already done that. So in general, pharma, IT both these are out for me.
You are not sounding terribly optimistic, are you sensing that the best part of this trading move is coming to an end now and you would rather be on the side of caution rather than lot of aggression?
For the frontliners and for the Nifty, yes. Because I have been feeling that an increase in volatility is imminent and that would probably mean a lot of ups and downs. Even though at the end of the day or at the end of the week, the Nifty could actually move up, traders may not get much out of that increased volatility. That's my sense but there are opportunities in midcaps. So one just has to search for them. But for blue chips, it's better to be cautious.
Which of these frontliners concern you the most technically?
I just referred to Pharma and IT. I would stay away from both of them and in general, these are only short-term trading opportunities available now in most of the frontliners.
As a trader how would you read this opening, 6 points down on the Nifty now?
There is nothing really much to see here, 6 points down on the Nifty in three minutes is no big deal, but I would not be buying unless we see a decent 20-30 point dip. As a day trader that would be a point where you actually want to go long and there is no question of going short at this point of time.
Have you had a look at Unitech's chart?
I had a look at the chart but I haven't understood it. Earlier it went up hitting circuits all over, then it came down in the same way. So while I am sure there must be something good in it, I assume there are lot other infrastructure stocks like Gammon India and JP Associates with meaningful charts and I would prefer to buy any one of them.
Would you buy anything in textiles, it's been 'stop-start' trade on them but some of them have moved?
Yes, they have and there are suggestions that if the markets remain steady they could actually move a little more. We have Arvind Mills finally looking up, Alok Textiles, then the Vardhman group, Nahar Spinning; lot of these stocks are suggesting breakout possibilities.
What do you do with Balrampur Chini, it pulled back from its fall to Rs 100 but then seems to be struggling once again at the Rs 100 mark. How do you trade this one?
You don't trade this one just now. We are just watching the sugar pack, it is possible that this decline in sugar prices may finally come to an end, that will be found out only after a few weeks, not even days. If sugar stocks start building some kind of a base here, they would all be buying opportunities. But as of now, I would not do any bottom picking, not even in Bajaj Hindustan, which is my favourite.
Did you have a look at some of those metals because they are trying to claw back--- Hindalco, Nalco, even Tisco?
Yes, they are but I don't see any potential apart from some very short-term trading opportunities, so I am a little away from metals. I am not very upbeat on them, not now.
Apart from Unitech, do you like any of the real estate stocks, Ansal, Mahindra Gesco?
There is a third one Adani Exports, which I assume is now a real estate stock. It went up dramatically then it corrected, which was good and it's now moving up after a small base, so rather than Mahindra Gesco, which I do not like, I would look at Adani Exports.
Do you track Reliance Petroleum, range bound stock but over the last few days it has tried to break out of that range do you think it will succeed?
I don't track it.
Do you track crude?
Yes, I do and sometimes I also trade in it.
What is your call on crude?
The impression is that crude is now standing at support and if it breaks down, we will see another USD 5-7 downside.
Disclosures:
I have a lot of midcaps but I don't remember if we talked about them.
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