Important for Nifty to hold 5080: Anil Manghnani

According to him, 5,135 is the first key number. "That is the low of the March correction. Then 5,080 is the major level for me. I think as long as the market holds 5,080, there is always a hope that it will bounce back. But if it starts to go below that then I will be a little more concerned," he adds.

Also read: Nifty may breakdown, short on rally, says Sudarshan Sukhani

Below is the edited transcript of the interview with CNBC-TV18's Mitali Mukherjee and Reema Tendulkar. Also watch the accompanying video.

Q: We have breached the 5,200 mark on the Nifty. Where do you see the Nifty headed now? Do you think this earlier support of 5,150 will hold?

A: We are back in the 5,200-5,100 range that the market has tested umpteen times now. Rather surprising, given the move of January and February, we had spent completely two to two-and-a-half months in such a tight narrow range. We keep testing this 5,200-5,150. I don’t think anyone would have expected that after the January and February rally.

But more so than the index, I think the stocks are getting damaged and grinding much lower. Each time we come and test this 5,180-5,150 range, stocks are much lower than they were previously. So, I think that is the problem for the market that the Nifty may not have broken down, but many of the stocks, especially in the high beta names whether it is banking or infrastructure or even metals have grinded lower. I think that is the problem for the market. And then the volumes are disappointing.

I think 5,135 is the first key number. That is the low of the March correction. Then 5,080 is the major level for me. I think as long as the market holds 5,080, there is always a hope that it will bounce back. But if it starts to go below that then I will be a little more concerned because that is a 50% retracement of the entire move from 4,530 right upto 5,630.

Q: Yesterday's move seems to be precipitated by a fall in the banks as well, is that where you see the sharpest crack coming on the Bank Nifty?

A: If it was to do with the new Basel norms, probably that is the reaction. But I think prior to that also you have got quite an early indication that something is wrong where you had great set of numbers from Axis , from ICICI also and the market didn’t react very positively to the numbers, maybe a percent or a percent and a half up on post the numbers. That itself tells you something is wrong.

The market is not looking at results now. There are other issues like general anti-avoidance rule (GAAR) and the whole government policy reforms. But I think overall the market, along with the Nifty or stocks even the banking names are grinding. I still think 9,900 to about 9,750 remains the key support zone. It is the cluster of 200-day moving average (DMA) for the CNX Bank Nifty. So, as long as you hold that in any fall, fair enough. But if you start to drift below 9,750 then I think deeper cuts can open.

Q: How would you approach the pullback that we have seen on Infosys , it has rallied all the way back to that Rs 2,500 mark now?

A: It becomes a short now. I think post the numbers of the big four, there is a clear shift from Infosys and Wipro to now TCS and HCL Tech. So I think this bounce is maybe because the stock got a little oversold. But from Rs 2,500-2,600 range, I would be a seller. I think eventually it will go back and retest the Rs 2,300 mark.

Q: Would you be a buyer in Biocon today?

A: It is not a momentum stock, but I think it has spent a lot of time at Rs 230-225 range. So, maybe just a pullback possible, it won’t be a fast one. I think it will grind up back to about Rs 255 and the recent low of about Rs 225 would be a stop. So, it is not a momentum, just trying to find something defensive in this market that is lacklustre.