The Indian market has been weak due to global and domestic uncertainties. Anil Manghnani, Modern Shares & Stock Brokers says, a pullback is still on the cards for the global markets.
According to him, 4,900-4,875 remain the key trading support for the Nifty.
Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.
Q: Technically, the Nifty is back down to the levels you were talking about as supports 4,900-4,920. Yesterday, we traded below that, this morning we probably will start below that again. Do you think that support is going to give away?
A: I think 4,900 and maybe even 4,875 remain the key trading support; 4,875 is the 61.8% retracement of the recent move you had from 4,788 up to 5,020. There is a lot of support coming in from all other sectors.
If you look at the US markets, they have done their initial fall, pullback and again sort of a retest of those 1,290-1,295 range. So, I think the S&P also is due for a bounce now closer to about 1,353, which might help. I think typically it has been ‘Sell in Maya and go away’ series. Normally, June tends to be a little better, atleast the past history suggests.
Looking at other charts also although euro is completely broken down, I think 1.2270 is a 50 quarter moving average. We are going to quarter averages. So, we are really digging for some supports. Since it’s so oversold, maybe it needs to start pulling back. Crude although I expected to stop at USD 89 per barrel, it’s dipped below. At USD 85.5 per barrel, a long-term, a three or four year trendline support is coming up and a 50-month support.
I think there are a lot of supports coming up in the commodities and in the currency markets, which should probably help the equities maybe in June. So, a pullback is still on the cards for global markets.
For India, it does look gloomy with all the data that is coming out. But maybe we got to look at the sliver lining with commodities collapsing the way they have, it sort of off sets some of the rupee loss. You couldn’t imagine India at USD 110 per barrel crude and 56 on the rupee-dollar. So, atleast 56 on the rupee-dollar and USD 85-86 per barrel on the crude is some sort of a silver lining, so maybe that should help our markets going forward.
Q: Would you back for the pullback? This series has seen pretty hard sectoral cuts whether its autos or even the outperforming space of FMCG that’s actually down as an index last month.
A: I will still go with banking. You saw a lot of short covering itself yesterday. That suggests that there might be some more shorts in the system. I think banking led the first part of the rally from 4,800 to 5,020. So, I think banking will still hold the key. But you got a little of other cutting also. You saw some in Infosys towards the last 5-10 minutes of trade. So, there could be still a lot of shorts in the systems.
I will start with banking then even maybe look like some of the beaten down auto stocks like a Tata Motor. Yes, it’s gone down with heavy volumes, but Rs 230-210 range is a good investment opportunity also.
Q: You have got a trading call on Voltas. You are buying that one.
A: Yes, I think it’s somewhat like an SBI trade where SBI bounced from Rs 1,800 to Rs 2,000 and then fell back and then started its major move. I think similar happened in Voltas where it had a sharp rally post its numbers and then you saw a significant correction. But at Rs 96, I think it’s done the correction. I think it’s headed back to Rs 105-108 sorts of levels.