"Today is not a good day to sell and certainly not a good day to buy even if one sees a relief rally. Therefore, it is much better to step aside for the day," he said in an interview to CNBC-TV18.
Below is the verbatim transcript of Sukhani's interview with CNBC-TV18.
Q: Looks like there is indication of a bit of a pullback this morning, do you approach it with looking to short the market or there is a bounce coming?
A: I do not think for today. Yesterday we thought there was a pullback and it was a disaster. Therefore, today I would expect the market to begin a period of choppiness. We had five days of back to back decline. Yesterday was a big decline. So, this more or less takes the shape of some kind of a selling climax; it was not a one day move; it was multiple days, we combine it together. It is possible that sellers may have exhausted their arsenal.
That sinking feeling: Are we in a bear market already?
However, today is not a good day to sell and certainly not a good day to buy even if one sees a relief rally. So, what is the outlook there? For short-term traders the best way is to step aside and watch for today's price action. For intermediate position traders, either they closed their intermediate positions yesterday or they have continued it. If one has closed it then reinstate short positions and keep a tight stop.
Currently we will bring down the Nifty stop to 5,600. If the Nifty takes out 5,600 on its way up then the short positions should be closed and there is money made for people who took a positions much higher. Even if one does not have it -- because it is not necessary that it will go to 5,600 so put in short positions, if for some reason one removes them, these are the intermediate positions; they are easy to predict, easy to direct.
This market is going down even if we have 200 points of a rally and we could, whether from 5,400 or 5,300. Whatever happens, this market is heading towards 5,200 and probably much lower. The short-term trades are always more difficult and today there is a sense that this market is opening up. How much higher or how much lower, is difficult. Therefore, it is much better to step aside for the day.
Q: You are shorting Dena Bank today.
A: A lot of public sector undertaking (PSU) banks are coming in our short selling ideas. Dena Bank is making new lows. Andhra Bank , Canara Bank , anything, just pickup a PSU bank and it is making new lows. New lows need to be sold into. If the market opens higher, as it should then sell into the strength. The choppiness will give the short-term trader, the day trader a down move anyway. So, it is a good idea to be on the short side in PSU banks. A V-shaped rally is very unlikely here.
Q: Larsen and Toubro (L&T) is in your sell list.
A: L&T is not doing the right things. What it has done is it had a small rally and then a big decline. This is not the beginning of any kind of an upmove. This is a continuation. Therefore, we focus on the IT stocks where some buying should eventually be done and remain short on the capital goods sector; that would probably include Bharat Heavy Electricals (BHEL) if it moves a little higher today. For today L&T is a short sell. Wait for this morning bounce then consider going short. That will also give traders a stop loss level, which maybe tighter than today.
Disclosure: Sudarshan Sukhani has no holdings in the stocks discussed.
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