Mkt may wipe out 50% of rally in medium-term: Manghnani

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Mkt may wipe out 50% of rally in medium-term: Manghnani

Anil Manghnani of Modern Shares & Stock Brokers in an interview to CNBC-TV18 shared technical reading on market and stocks across various sectors.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by Anil Manghnani See what other Experts & Brokerages are saying about Reliance See messages about Reliance

Anil Manghnani of Modern Shares & Stock Brokers expects to see a correction in stocks and Nifty in the medium-term .

In an interview to CNBC-TV18, Manghnani said, "My gut feeling is if this market has to do something more than wherever it stops, it has to do a 50% correction of this entire move. Even stocks that have moved up 30-50% need to do that."

So, he suggests investors to sell stocks that have met their target price. "Now you look to sell stocks because this market has not moved on the index, it has moved on stocks and many stocks are hitting some key levels," he added.

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

Q: It is not necessarily tied in with the technical but how are you seeing Reliance 's chart shaping up, 5% down first and 4% up yesterday?

A: Yes, but it has already been mentioned, it is disappointing to see what the market has done over the last two weeks and what Reliance has done. Reliance has not moved up with the rest of its peers. A lot of the largecaps are up 20-25% in this move be it Tata Steel and ICICI , Axis Bank . All the big names from the Nifty have moved but Reliance was at Rs 690, today Rs 740; so hardly any move, not even 10% which says its a laggard.

Now whether this is a move by the management to push up the stock I am not sure, but maybe it will help the Nifty right now because lot of these stocks have reached major levels where they need to start to correct. Maybe that will be a case where the Nifty may not crack fast but other stocks will correct and maybe Reliance because of this news gets little bump up. Immediate targets to watch out for are Rs 764 and then Rs 792, but charticaly a laggard to the rest of the market.

Q: The real outperformers have been the capital goods JP Associates , L&T from the frontliners, many more from the midcaps. Is there anything that stands out to you in that space and still represents long potential?

A: Maybe not long, but I could warrant a hold and ride the upside. Larsen has surprised me for sure; I expected it to top out above Rs 1,180. It has overdone it but because its momentum maybe stretched out at Rs 1,300 even Rs 1,320 Similarly, for BHEL maybe Rs 290-300 is possible. But I will stick to the two big ones; I wouldn't venture into some of the smaller ones because they tend to fall much faster. Given the sheer nature or the way they have risen, there may be little more upside left.

Q: Are you bearish on ICICI Bank this morning?

A: I think more so. I mentioned 9,100 or so on the Bank Nifty is a major resistance, it has come there. So, some of the banks need to start to correct now. I have gone for ICICI Bank, it has hit a major target of Rs 809 maybe can stretch to Rs 834. But from Rs 794 to Rs 834, I am a seller with a target on the downside maybe closer to Rs 745.

Q: To stretch the medium-term outlook on what you are seeing on the index now, is it still looking like a powerful bear rally or does this have the makings of something else, some kind of recovery in the market?

A: My belief is even if it is something new, typically wherever this market stops you have to get one dip. This is because at the absolute lows there is no indicator that its going to give you a buy, its the first fall that gives you the correct indication. My gut feeling is if this market has to do something more than wherever it stops, it has to do a 50% correction of this entire move. Even stocks that have moved up 30-50% need to do that.

Index wise I talked about 4,965 last week maybe stretch it out to 5,065. but my gut feeling is now you look to sell stocks because this market has not moved on the index, it has moved on stocks and many stocks are hitting some key levels. I do believe that whenever the market tops out all stocks are not going to hit their highs with the market, some may have already done so. In this 100 point range you pick stocks that have done their targets and starts selling them because typically after such a big bounce you should see at least 50% correction both in stocks and the Nifty.