Mkts indicating crisis in investor confidence: Manghnani

Excerpts from CNBC-TV18's exclusive interview with Anil Manghnani:

Q: Are the technicals suggesting that because we seem to be getting sold into every time the market is attempting a small upmove?

A: I’m not sure how the global cues will affect us this morning, given that they were down one and up the other the two days that we were shut. But I think this week would be more crucial from local factors such as inflation, year-end adjustments or the F&O expiry.

Coming back to the technical side, I think if we go back last week even though it was a truncated 3-day week, there is a serious concern on the broader market. The way the Junior Nifty, the smallcaps and the midcaps are falling even on days when the Sensex andNifty are rallying, the broader market is usually negative that’s what is the sign of concern. The way we fell off in the last hour and I don’t think that it was the largecaps that fell and it was some of the heavily liquid may be non-institutional but F&O midcap trading stocks, the IFCI’s, the IDBI’s or the fertilizer stocks that’s a worrying sign.

I guess it’s not a margin pressure because we haven’t had anything after the January contracts in terms of margin pressure. The February and the March series have been light but the way some of the midcaps got sold up in the end and huge unwinding of positions in F&O, that suggest some sort of crisis in confidence, which is a worrying sign. So may be the overall market is not struggling in terms of the largecaps but there is a concern for midcaps, smallcaps and the Junior Nifty stocks. 

Q: What’s the call on the Nifty now from this level of 4,570?

A: We are clearly in a bear face on the way you define it but the last hope for the bulls, I think they are running out of hopes because every time we talk about levels they keep breaking. But it held 4,448 last week, so I think as long as it doesn’t break that the bulls have some hope but I still feel that any rise will be sold into and I can’t see this market sustaining at higher levels.

Q: What do you do with the private banking lot now? What are the charts suggesting for stocks like ICICI Bank, HDFC Bank and even Yes Bank?

A: I think I will stay away from them for the time being. There is too much uncertainty out there; I guess I will probably wait till the next quarter where things become a lot clear. Even from a technical point of view they have broken through some serious levels especially Kotak Mahindra Bank and ICICI Bank. I think ICICI Bank is clearly eventually going to head towards Rs 694, and maybe in a more disastrous situation Rs 600. Kotak Mahindra Bank I think Rs 583 was crucial, it broke that Rs 555 became crucial it has broken that also. It just seems to go through all levels and from Rs 1,400 to sub Rs 600 already is a quite steep fall, it itself is showing weakness and we don’t need to predict what’s happening with the stock. But it is very weak I would just avoid you may see the sharp 8-9% trading bounces on gap up opening days. But the fact that after that it goes and makes a new low suggests us that there is still a lot of selling left over there.  

Yes Bank’s chart is getting weaker it needs to hold Rs 126 on the next – it did break briefly last week on Tuesday when it collapsed. But it bounced back on Wednesday, which is fine. But on the next fall it should hold Rs 126, otherwise if it doesn’t it could be headed more towards Rs 100 sort of levels. So keep an eye on Rs 126 for Yes Bank.     

Q: Did you look at some of the liquid names, which are coming off at every rise, what are they looking like these charts IFCI at Rs 40 odd and Ispat sub Rs 30?

A: I think they are very weak on the charts no doubt. But they are very close to their January lows Rs 39.90 or Rs 40 was the low on IFCI although the chart is very weak Rs 121 was the high so it lost at least two-third of it’s value already from the top. Any break below Rs 40- 39.90 levels then you could see the slide even getting further maybe Rs 37.20 and then even lower. But then levels don’t work after that once you start breaking through previous lows.

Ispat is also around the  January low of Rs 28 or so. So again if it breaks that then there is a problem.

On the largecap front I am getting worried on is the Reliance Capital; the stock is getting very volatile now. Rs 60-80 move every 15-20 minutes in F&O is getting a little worrying. It closed below key levels at Rs 1137-1125. It needs to get back above those levels very soon. If not and we have another wave of selling lets say on the Sensex and the Nifty this stock can really go back to Rs 700 odd levels. So that’s one to keep an eye and it’s really breaking down quite fast on the charts.  

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