Cautious on Nifty; book some profit: Anil Manghnani

Given the way the market has rallied over the last two-three weeks, he says, it still remains a buy on every dip. "If the market had to rally from here, it has to be banking because that’s a sector that broke out quite decisively in the last 500 points rally of the Nifty," he asserts.

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Below is the edited transcript of his interview with CNBC-TV18's Latha Venkatesh and Sonia Shenoy.

Q: What’s your view on the Nifty?

A: I feel the well defined upward trending channel is clear now. In this current rally, when we had the big move on last to last Friday, we hit that channel at about 5,720. On Friday, the channel was about 5,738. We did hit 5,735 or so. The channel is upward sloping. So, it extends by about 7-8 points every day. Right now, it is at 5,750. So, till it doesn’t take out the channel, I wouldn’t go and play the next big move.

I am not saying I am bearish on the market, but I am little cautious right now because it is hitting that line, but not sustaining. Friday was a great day, but many stocks came off at the end of the day, although the Nifty held out. So, it is suggesting some profit booking at these levels.

My call is if you are going to go further long from here then you wait for a decisive close above that trend line channel, which is currently at about 5,740-5,750 range and then take your next big move.

In the mean time, given the way the market has rallied over the last two-three weeks, it still remains a buy on every dip. If the market had to rally from here, it has to be banking because that’s a sector that broke out quite decisively in the last 500 points rally of the Nifty.

Q: You have a sell on BHEL . What would your advice be?

A: BHEL stabilised around Rs 195-196. It has been hit now three times, first in the 2008-09 disaster of the market and now couple of times in this year. So, maybe there is support around the Rs 196 mark.

Having said that, it has been a Rs 60 jump from there and quite sharply. When I look at the monthly close of September, the monthly chart still hasn’t changed that drastically. That tells me that even if Rs 195-196 is to be believed to be the bottom, it would have to do a retracement of the current Rs 60 move.

I feel with a stop loss of Rs 258-259, you probably short for a target of Rs 235-225 range. I think the stock has to come back somewhere around there, probably make a higher bottom from the Rs 195 low and then suggest that now the worst is over. So, I still expect one more down leg before I can take that bigger call that the worst is over for BHEL.

Q: Why have you picked Syndicate Bank ?

A: There is discrepancy between PSU and private banks, you got to see the catch up in the PSU stocks. So, if assuming that banking has to lead any rally and that PSU banks need to play catch up, I went for a strategy where you buy one of these banks. I think it has broken out on the weekly chart. So, maybe a stop loss of Rs 102, a pull back to 115-117 looks likely.