Technical analyst Anil Manghnani of Modern Shares & Stock Brokers doesn’t see too much downside to the Nifty from current levels.
Sensex opened volatile on Friday despite extended losses yesterday in the US markets for the second consecutive session. Sensex was up 7.5 points to 18,853.77 and Nifty rose 0.35 point to 5,739.10.
"With the Dow down 300 points we have barely lost 20 points on the Nifty. We are holding up pretty good for ourselves," he said in an interview to CNBC-TV18.
Keeping a stop loss 5,680 one can trade on the long side, he advised. On the upside, the Nifty has the potential to touch September-October high of 5,815 levels going ahead.
Below is the edited script of his interview with CNBC-TV18’s Udayan Mukherjee and Sonia Shenoy.
Q: If we do see this 5700 level getting protected on the upside, are you seeing any kind of conviction trade on the index itself or would it be a no-trade zone?
A: With the Dow down 300 points, we have barely lost 20 points on the Nifty and even this morning it does not suggest too much of a downside. So I think we are holding up pretty good for ourselves. I would probably look at 5680 as the stop loss now and still trade on the long side. I think the market has given a breakout.
The upside targets still remain; one is 5815, which was the September-October high and then 5900. So the trade is still on the long side with a stop of 5680 for now.
Q: Would you say the same of the Bank Nifty?
A: Yes, I still believe it has an unfinished target of about 11900, which it did not do the last time we went to 5800. I think it is more on the private banks but if you look at yesterday’s trade, even on a day that the market was down, you saw an State Bank of India starting to bounce, you saw Union Bank carry on its upward movement, and you even saw Allahabad Bank bounce. So you are seeing some PSU banks starting to inch up again.
Obviously the key number now is SBI and I think that will have a big bearing on the whole PSU banking sector. But I do believe that if the market has to go up banking should lead. So, about 11900 on the CNX Bank Nifty would be the immediate target.
Q: The entire real estate space has been pretty active and you like Orbit Corporation from that bunch?
A: Yes. It is not one of my favourite packs but since there is momentum, I tried to pick one in that. I think at Rs 60 it has given a fresh breakout yesterday. So with a stop loss of maybe Rs 56, I believe it will retest the recent high which was made in October of Rs 65 and then probably head to about Rs 72.
Q: Some of the infrastructure stocks have been looking a bit wobbly despite the market being strong. Even cracks were visible in stocks like Larsen and Toubro yesterday. Any problem charts there?
A: The only one I would probably be little more concerned about is BHEL. The stock is rallying from Rs 224, which was the support level but that stock needs to start closing above Rs 250-260 levels to give a little more comfort. Otherwise every time the stock rallies, it is a sharp fall. Recently it fell from Rs 272-222. That is Rs 50 fall when the market really did not correct. So that is the only one in that pack if you are looking at capital goods that you will be concerned right now
L&T still remains a buy on every dip and the short-term maybe around Rs 1,740 sort of target.
Q: There was short covering in Bharti Airtel yesterday, a quick word on that?
A: I am still not convinced. I am overall maybe negative to neutral on Bharti and maybe only neutral on Idea. I still believe Bharti will spend another quarter or two in this range of maybe between Rs 240 and Rs 280-300.
Q: How are you approaching this upmove now? If the Nifty does make it to those targets that you are speaking about 5820 and beyond, would you be approaching it to take profits or would you stay invested in a longer positional trade?
A: A little early to say what the chart is going to look like at 5900. But my gut feeling is, the way the US markets have started to correct and S&P is reaching some major targets closer to the 200 day and the 50 week moving average, so what might happen is because we probably got over this period where the S&P has corrected and we haven’t, when they give that trading bounce to make a lower top, that will help us go to 5900. But at that point the fall maybe a little bigger in the global markets.
So when the bigger fall comes on in the US markets I think that will bring us back down. So if I had to stick my neck out right now, I would probably say 5900 is a good level to take some profits and then wait for the pullback to get in again.