Nifty has resistance at 5100, book some profits: Manghnani

Also read: Bullish on Nifty, target at 5200, says Sudarshan Sukhani

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

Q: How much more would you give the Nifty on the upside? Would you say the best of it is behind us or should this one be traded long?

A: It is a tough one. Three weeks back, when we first spoke at 4,800, my initial target was 5,100. We are very close to that range. I would like to see what the market does here because 5,100-5,150 is a major resistance zone for the Nifty. Correspondingly, if you look at the Bank Nifty also, 10,050-10,111 is a major resistance zone. So, I think with both the Bank Nifty and the Nifty coming to a major zone. I would like to give some time to the market. If I had bought earlier, maybe take some profits on the table right now and then let the market decide the next course of action.

It is no surprise that the markets are rallying. The central banks giving money to the Spanish banks, I think it has come in sync with what the market had done. Most of the markets like S&P were at major support levels, the VIX was at a major resistance level, the euro and crude were oversold. So, sort of a synchronised change from a long dollar strategy to book profits in dollar and everything else rallies. That could go on for little bit, I think the S&P could probably rally to about 1,345; if it had to stretch, even maybe closer to 1,362. So, there is a coordinated shift from what we saw entire May where we all equities, commodities and currencies were suffering and the dollar was rallying and now the dollar is correcting and everything else is pulling back.

Q: It was all about the Bank Nifty last week, 8% rally, from hereon how do you approach it?

A: I think it is coming to the first major test. There is no doubt that the Bankex has led this entire rally. If you remember two-three weeks back, I said if the market had to go to 5,100, it would be led by State Bank of India (SBI). So, I am not surprised that SBI has rallied from Rs 1,800-2,200. But even now SBI at Rs 2,220 has a key level where it needs to sustain above. For the Bank Nifty 10,050-10,100 is a major support zone. Take some profits and then wait and watch. If you get a pullback, yes, it is buyable. But at this level to go out and buy the bank Nifty, I think the risk-reward ratio is not in your favour.

Q: You have got a trading call on Coal India as well.

A: It is more of a profit taking call. The stock has bounced quite nicely from Rs 300 levels. But I think Rs 334 to about Rs 342-343 is the supply zone. So, if you get there, you can probably look at selling your holding or even shorting the stock with a stop just above that. I think it will head back to Rs 320-315 sort of range.