Jul 27, 2012, 11.06 AM IST

Buy HUL, IDFC; avoid JSPL, Infosys: Anil Manghnani

Anil Manghnani of Modern Shares & Stock Brokers, says that expiry effect broke 5060 levels. He also says he would closely watch the market before taking the next big move.

Anil Manghnani, Analyst ,Modern Shares & Stock Brokers

Expertise : Equity - Technical

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Bazaar at 08:00 am

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Anil Manghnani of Modern Shares & Stock Brokers, says that expiry effect broke 5060 levels. He also says he would closely watch the market before taking the next big move.

He also says that both Tata Steel and Tata Motors are underperforming and stocks like JSPL and Infosys are a cause of worry. He also says that some institutional base selling is happening in these stocks.

One can buy HUL in the range of Rs 461 to Rs 456 for the day, stop loss at Rs 454. One should see a quick pullback to Rs 471-477 levels.

In IDFC, one can buy at Rs 123 and a pullback even of 50% of the recent move from Rs 142 to Rs 127.

Below is the edited transcript of his interview to CNCB-TV18.

Q: How you approach Nifty this morning?

A: Last Friday, I mentioned that the market was in a corrective mode and may even touch 5,060 levels but it was disappointing that we closed below that level. But I would like to give the market a couple of days. Many things happened in the last two day like expiry, rumours about margin calls, pledged shares, sudden removal of 51 shares from Futures & Option (F&O), so there where many things which the market need to cope up.

Let's assume that expiry effect broke 5,060 levels and given a couple of days to see can the market bounce and now if one had to retrace again would it hold 5,060.

I would like to watch before taking the next big move. From the level point of view the next support is 4,990 which is 61.8% retracement of 4,770 and 5,348 and the first test in this bounce for the market will be about 5,150.

So, we will have to give markets a couple of days to recover from the carnage. Heavy volumes, advance decline ratio for the stocks, midcap hammering were the factors that lead to such a great fall.

Q: Is Tata Motors reaching support around Rs 200 or you wouldn't still buy it?

A: Other than the midcap carnage, some large caps that need to be mentioned include Tata Motors, Tata Steel , Infosys and JSPL . Tata Motors had a clear support at Rs 207 but it closed below that and being an F&O expiry maybe it will give it a little bit, try to see whether it can get back above Rs 207. But, if it consistently trades below Rs 207 then there is no level up to Rs 180-185 range, so definitely it is worrisome because at Rs 217 it was the low when the index was 4,770. Today at more than 5,000 it is at a new low. So underperforming the market and similar is the case with Tata Steel where the low was Rs 389 when we were 4,770.

JSPL and Infosys are the two stocks to worry because JSPL is now at a two-three year low and is taking a hammering and I think the next target is closer to Rs 352. For Infosys, last August's low was Rs 2,160 and it has now decisively broken that. The next target for Infosys is Rs 1,975. However, these four stocks have got nothing to do with pledging and margin calls. Some institutional base selling is happening in these stocks.

Q: You have a buy on Hindustan Unilever (HUL) for the day?

A: When the results came out two days the stock drifted down but on much lower volume, which is a good sign. So, I think even for a trade defensive mix more sense in the market that is quite volatile. So, Rs 461 to Rs 456 is a buy range for the day, stop Rs 454. One should see a quick pullback to Rs 471-477 levels.

Q: You are long on IDFC as well?

A: As a trade the stock has corrected about 50% of the recent rally from the May-June lows up to the July highs. So, Rs 127 is the 50% retracement. So buy up to 61.8% which is about Rs 123 with a stop below that and a pullback even of 50% of the recent move from Rs 142 to Rs 127.