In an interview to CNBC-TV18, technical analyst Anil Manghnani of Modern Shares & Stock Brokers said the immediate resistance for the Nifty is now seen at 5,750-5,770 levels.
Indian shares gained momentum with the benchmarks rising 1 percent on Thursday. Nifty, which was in a range of 5633-5725 in last five sessions, rose 58.45 points to close above 5700 level at 5,718.70.
He further said that one can keep stop loss around 5,635-5,640 levels and hold on to longs. "The price action tells that somewhere around 5,635-5,640 at least the bulls do not want to give up that," he added.
Below is the edited transcript of Manghnani's interview with CNBC-TV18.
Q: Technically did yesterday’s move change the picture or you are still not confident that this is a massive breakout or anything like that which is coming up?
A: I would say little early to say that. Ideally, I would like the correction up to 5,585 even 5,550 and then get a proper bounce. But having said that, the price action tells you that somewhere around 5,635-5,640 at least the bulls do not want to give up that. For now one could take that as stop loss and hold on to longs.
Give it a couple of days more to see whether this is a resumption of the uptrend or still in that time wise correction rather than price wise correction where stocks individually are correcting, but the index is not doing much. Maybe in this move 5,750-5,770 is the immediate resistance, but because the price action is holding the 5,635-5,640 range, keep that as your stop now.
Q: You do not like the charts of Tata Steel?
A: It is due for a pullback, the stock has rallied with the rest of the market, but the chart is struggling around the 200 day moving average and the 50 day is still well below the 200.
Normally, when that is a setup it doesn’t just takeoff in this move, it should give one more pullback before moving higher. I would still look to sell here, the 200 is at Rs 425, so I will keep that as my stop. It will head back closer to the 50 day again, which is closer to Rs 396.
Q: Do you like Vijaya Bank?
A: It is one of the smaller ones, but after a long time it seems to be setting up nicely both on the weekly and the monthly chart. For a change, the momentum indicators are breaking out, so that’s why I suggested that. I have given it as a trade with a tight stop loss at Rs 56, target is Rs 62.
Even as a positional or buy and hold strategy eventually, I look at it somewhere closer to Rs 71. One can play it either way, but it is one of the stocks that hasn’t moved but now breaking out on momentum.
Q: Any thoughts on the charts of the rupee and if there is any breakdown that you see over there?
A: I suggested that 52 or so should be the support for the dollar and then it should bounce, but I am surprise at the pace it’s bouncing. I thought what would probably happen is around 53 mark it again goes retest 52 and then somewhere by November-December go and settle closer to 54.5-55 range before next year rallying closer to 49.
It is not playing out the way I expected it to, but at least the bounce from 52 was more inline. If it continues this move then 54.5 is where one would see some pressure again coming back on the dollar.