Yesterday was a very strange day and an even stranger April series as far as the Nifty is concerned, says Anil Manghnani of Modern Shares & Stock Brokers. The way market chose to close up the April series, the Nifty barely moved 10 points net basis which is kind of strange as you rarely see something like that.
He says volumes in this series were quite low and pathetic. “Even on the last day, the volumes were on the lower side. When was the last time you saw the Nifty so rangebound on the last day without much volatility?”
After the stupendous January-February rally, he doesn’t think most of us would have expected such a dull April month. He guesses the problem still arises as far as stocks are concerned. "It’s the stocks that are grinding lower each time the Nifty tests this 5,200-5,180 range. The damage on the stocks is the main issue," he says.
He finds it a bit disappointing the way the market is grinding down and the way volumes have died and the way stocks are collapsing. “5,135 becomes the first important level that’s the March low and then the 5,080 which is the major support.” The trend is still intact as long as 5,080 doesn’t break, says Manghnani.
Below is an edited transcript of his interview. Watch the accompanying video for more.
A: It was a disappointing day for infrastructure yesterday. The way some of these stocks like Lanco broke through the key support this week - Rs 17 and Rs 15, now it’s trading well below Rs 14. I am a little concerned about Lanco for now and it is probably an avoid and wait for some clarity to emerge.
GMR is interesting. It’s correcting but it’s coming close to a good support level. So Rs 26 and Rs 24, in that range I probably expect it to take support and start to bounce back. The interesting ones that buck the trend are IVRCL and Punj Lloyd, those are the ones to look at for now. IVRCL has good support in between Rs 59-55. So every time it comes in that range, it becomes a buying opportunity. For Punj that range is Rs 51-48. It did do Rs 51 couple of days back, now it’s bouncing immediate resistance around Rs 58.
Q: Any thoughts on the Bank Nifty and how you would approach that in the May series?
A: As far as the Bank Nifty is concerned it is very similar to the Nifty - what it has done in the current series where after testing a support of 9,900 it bounced. It even took out a falling trend line like the Nifty last week, but then after two-three days above that trend line just like the Nifty broke down. I think it was last Friday when we had that big crash to 5,000 to Nifty futures. Similarly, the same thing happened on the Bank Nifty.
The levels are close by – 9,970 to 9,760 - a couple of 200 day moving averages (DMA) in the Bank Nifty and even 9,900 was the old Fibonacci support. So just watch for the range between 9,960-9,760. Somewhere if the Nifty had to bottom out around 5,080, the Bank Nifty also would try to bottom out in that range.