5250-5245 key support for Nifty: Manghnani

He feels that there is a complete disconnect between Nifty’s course and individual stocks. Large cap stocks like HUL and ITC are making life time highs and supporting the index, but PSU banking, infrastructure and telecom stocks are at one month lows, he elaborated.

“You don’t buy the Nifty you buy stocks, so what is the point of the Nifty breaking out when your portfolio is actually breaking down. So, this is not a market that one should be over excited about," he added.

Meanwhil, he sees 5,250-5,245 levels as a key support for the Nifty.

Below is the edited transcript of Manghnani’s interview with CNBC-TV18.

Q: A case for 5400 and beyond could be made on after 20 August do you concur with this view?

A: I don’t share the same excitement about the Nifty being at one month high. It is supposed to be a fair reflection of what the market is doing, but I am quite disappointed by the market movements of the last two days. Here you have the Nifty over the last two days trying to take out that near two year trend line at 5,370, sure it came off it.

But, it is not a market that you should be over excited about. Here when you are trying to breakout you have a negative advance decline ratio of 900 declines to 400 advances on the two days that the market is trying to breakout, which is quite strange. You would expect exuberance on the day when the market is trying to break above that 5,370.

What is really amazing is if you take July 10, 5,348 high and compare it with today, where we are pretty much around the same level of 5,340 and compare stocks with July first or second week high to where they are today, you will find that most of them are atleast 10-20% lower.

So, in the end of the day you don’t buy the Nifty you buy stocks, so what is the point of the Nifty breaking out when your portfolio is actually breaking down. I think that is the disappointment.

You take out HUL and ITC which is making life highs, which is keeping the index high.  But then you compare PSU banking stocks, infrastructure and telecom stocks they are all at one month lows. There is a complete disconnect between what the Nifty is trying to do and what stocks are doing. A little disappointed on a day we are talking about 5,370 trying to breakout but stocks absolutely going in the reverse direction.

Q: How would you approach both Bharti Airtel and Idea that tanked yesterday?

A: It is little discomforting specially for Bharti. I am not sure how many year low it is, but the volume is what worries me. When the stock is breaking down making new lows the average volumes before the results was 30-40 lakh shares on the NSE and now it is breaking down on 3 crore shares every day.

So, the amount of stock that is being dumped even at these levels is a little worrying. I think Rs 232 would be the next logical target for Bharti, so still some more downside to go in this fall.

Q: What is your view on Tata Motors ?

A: Tata Motors will be stuck in a range Rs 243-248 is the first major test on the upside.  I don’t think it will run away. It could pullback to around Rs 225 levels and spend some more time trying to find a bottom or a base in this range between Rs 210 and 240.