Anil Manghnani, analyst, Modern Shares & Stock Brokers predicts a correction in banking stocks and opines that if the CNX Bankex touches 12000, then private banks may see a downside.
Maruti Suzuki is another stock, Maghnani is bearish on. He credits this sentiment to the yen. "The yen has had a great run from 79 to 94 and that has helped Maruti move up. But now, the yen may pullback to about 86 before starting the next move which is a longer call to 105-106. In this move of the yen from 94 to about 86, even a Maruti which is purely a yen play now, could give up some of the fantastic gains it has had recently," he adds.
With the disappointing market performance in the week, Manghnani is concerned about the broader market. "For now, I watch 5830-5820, the 50-week-moving-average as the immediate major support for the Nifty. I guess there is a clear disconnect like between the broader market and what the Nifty is doing," he adds.
Below is the edited transcript of Manghnani's interview to CNBC-TV18.
Q: It's been a pretty bad close yesterday. Is your conviction on a breakdown growing with every passing day?
A: One does believe at some point that cannot just be a case where the Nifty drifts and the stocks get hammered. The Nifty is probably doing a normal bull market correction but there are stocks that are now resembling more bear market scenarios. For a while, I have been expecting that even the Nifty should now go for more meaningful correction given what the broader market is doing, but it is not happening which is very strange. I guess it is a handful of stocks- Sun Pharma, TCS that is holding up the market.
However, the broader market is a real concern. For now I watch 5830-5820, the 50 week moving average as the immediate major support for the Nifty. I guess there is a clear disconnect like between the broader market and what the Nifty is doing.
Q: When you look at the Index, which ones of the heavy-weights look most vulnerable which can lead to a breakdown in the Index?
A: Given what has already happened in capital goods, cement sector, they could really fall even more. One is seeing what is happening; the weaker stocks just keep getting hammered. In cement sector, ACC could go in for a bigger fall and BHEL may se Rs 195, which is the previous low, now become a very crucial level. However, that is from the weaker names.
If one looks at the stronger names, one would have to look at some of the banks. There are early signs of some correction even in the bigger banks. If I look at the CNX Bankex it looks like it is now headed towards 12,000. If that happens then there is a clear case for some of the private banks also to now play some sort of a catch up on the downside.
The other one that could be interesting is Maruti Suzuki. Maruti has fallen from Rs 1,590 to sub-Rs 1,500. It is a clear case of the yen. The yen has had a great run from 79 to 94 and that has helped Maruti move up. But now, the yen may pull back to about 86 before starting the next move which is a longer call to 105-106. In this move of the yen from 94 to about 86, even a Maruti which is purely a yen play now, could also give up some of the fantastic gains it has had recently.
Q: What are your views on Crompton Greaves?
A: It is tough to go and sell these stocks, especially a stock that is at three and a half year low. When the market is still at 5900, it is quite strange but the way it has broken now, the stock is pretty much headed to about Rs 90 first and then Rs 85. So, maybe keep a stop at Rs 107, which is 20-day average and then one can still play for some more downside.
Q: Technically a word on Tata Motors?
A: Tata Motors is one of the volatile names because whenever you get these flash crashes or an odd crash, Tata Motors seems to be one of them. I think Rs 267-Rs 266 now becomes a very key level. If it does open seven percent down, because that is the 50-week average and the 200 day, then any break of that would be a more significant breakdown. However, for now, it should hold Rs 266.