After a steady start on Tuesday, Indian indices lost steam in late trade. In an interview to CNBC-TV18, technical analyst Anil Manghnani of Modern Shares & Stock Brokers said that the market has now entered a gradual phase of correction. "There is no clear evidence on the charts to take a bigger call on the downside. It still suggests buy on decline, but maybe that buy comes at a little lower," he added.
The Nifty, he said, is seen heading towards the key level of 5,550."It may settle at these levels and then bounce back," he added.
Below is the edited transcript of Manghnani's interview with CNBC-TV18.
Q: It has been whipsawing this way and that for the market but how would you approach today?
A: We are in that gradual phase of corrective mode post that flash crash couple of Friday’s back. It has been a gradual fall, which is expected given the sharp rise and the amount of money that has come in. I don’t think anybody expected to get any sharp decline; it is going to be a slow gradual process.
We are working our way towards that key level of 5,585 may be even 5,550. I expect the market to settle down somewhere around there and then again start another bounce up. I still believe that overall setup hasn’t changed. There is no clear evidence on the charts to take a bigger call on the downside. It still suggests the buy on decline, but may be that buy comes at a little lower and that’s the gradual process that is going on right now.
Q: What is the chart of HCL Tech telling you, that’s a stock which is in focus this morning?
A: It is still strong no doubt. Even post Infosys the stock has closed at Rs 585 yesterday, which is only Rs 10 from its recent all time high. It still suggests that what's happening in the last 2-3 quarters, whenever Infosys comes out with a poor set of numbers, the money switches from Infosys to stocks like HCL Tech and TCS.
May be we haven’t seen that in TCS this time post Infosys poor numbers, but HCL Tech definitely is benefitting. So Rs 618 is the immediate trading target is. In the medium to long-term, this stock still has a potential to continue to benefit from Infosys sliding and eventually may head to Rs 700. For now, watch Rs 618 as the key resistance.
Q: You have a bearish call on Yes Bank?
A: It has got now stiff resistance around Rs 400, but yesterday’s bar was worrying, it was quite steep. It has closed below the 20 day and the volumes yesterday were quite significant compared to the way up they were much more on the way down.
If you get a pop today, it becomes a short Rs 390-400 range. The recent high of Rs 406 should be the stop. The stock is headed lower. May be Rs 373 is the first stop, but I am looking at closer to Rs 363. I am a little concerned on volumes yesterday were quite huge on the way down.
Q: We have seen some bearish trends in the metal space, any shorting ideas over there?
A: After having a significant rally, there was a move in Jindal Steel from Rs 320 all the way to Rs 460. It has now gone sideways. Yesterday, there were first signs of correction in many stocks. It was a similar in JSPL also. If it pops back to Rs 420-430 today, it is a shorting opportunity. The stock should head back to about Rs 390.