Focus on stocks; 5330 next key level for Nifty: Manghnani

According to him, at 5,200 levels, there were already some signs of a bounce back. "On Monday and Tuesday although the market was a little subdued, still the broader market for a change showed a better advance/decline ratio," he added.

The next key level for the Nifty from here would be 5,330. Despite the broader market doing well this week, one should remember that it is still is a stock specific market , he cautioned.

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

Q: How you would approach the Nifty this morning?

A: As long as in this fall, the 5,200-5,190 had held out, there was a rising trendline around 5,220, all that has held out. Also, on Monday and Tuesday although the market was a little subdued, still the broader market for a change showed a better advance/decline ratio.

So, there were some signs around5,200 mark that the market would give a bounce. No doubt, today we are supported by great global cues, so some may argue that we are only bouncing because the global cues are positive, but that is not fair.

This is because the market did show some sort of contentment at that 5,220 more the broader market as even though the market was coming down, stocks were settling down or moving up. So that was an early sign.

The first test is going to be around 5,330 that is the 50% retracement of the current high of 5,448 and 5,215. So let us see, what does market around the 5,330 mark and then take the next call from there.

Q: How would the commodities stock aid in this rally and are there any commodity names that you would buy now?

A: There maybe short covering rallies, but I don’t think given the coalgate scam, somebody is going to be that convinced to just go and buy them outright just because the Nifty is going to bounce. We have seen over the last couple of months and this is not a direction market where you take a call that majority stocks are moving up and majority moving down. It is a very stock specific market.

Yes, this week the broader market has performed but it still remains a very defensive market. You still have names like Hindustan Lever, ITC, even the pharmaceutical sector, people still lapping onto that share.

I expect a day or two bounce in metals, but eventually the fear or the overhang of coalgate will prevent these stocks from rallying too far ahead. You might get a pop, but I don’t think it is still too early to go and buy metals for sure.

Q: You are not gung-ho on Bharat Heavy Electricals Ltd (BHEL) after its recent collapse?

A: In a market that is trying to settle down and even inched up yesterday, you still had BHEL collapsing. My gut feeling is you will get a bounce but around Rs 207-211 range is where it broke down. So I would not short it here. But if it bounces back to Rs 207-211, I would go and short it again because the volumes yesterday when compare to the last time, it was at these levels, were significantly higher.

There is still some selling pressure; it eventually should head back to first Rs 197 which is the recent low and maybe even all the way to Rs 185. It may not hit it today, but in the bounce next week if you get that higher range, definitely go and short BHEL.