Nifty may see 5420, buy on dips: Anil Manghnani

He advises investors to buy on dips. "I still think the falls are buyable, maybe even right upto 5,200," he adds.

Also read: See rally in India, cautiously optimistic, says Baer Cap

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

Q: What would the strategy be on Nifty?

A: As far as the Nifty is concerned, although you have had a great rally from 4,770, the market has respected each and every level, be it 5,150-5,200. Now, you are seeing a similar thing happening at 5,300, where each Fibonacci level or even Fibonacci retracement, the market stops there, maybe even corrects a bit or sort of consolidates before it again starts its move up. So, I think you are seeing a similar thing emerge like you saw at 5,200.

It’s early days, it’s only been two-three sessions close to the 5,300, but clearly 5,300 is the first hurdle for the market. So, although there maybe a target at 5,420, which is the next level, you expect the market atleast to respect the Fibonacci retracement at 5,300, maybe take a pause, then take it out and move towards 5,420.

Suppose it did not take it out right away and you had a dip, I still think the falls are buyable, maybe even right upto 5,200 because that’s where the breakout actually took place. So, realistically if the market came back to retest that breakout level then again at 5,200 you would buy into it and keep a target back at 5,420. Clearly, 5,200 and below would be your stop because if that was the breakout then you don’t expect the market to break below that.

Q: There has been some strength on these metal counters, how would you trade that basket? Do you see any more outperformance or do you think its done around these levels?

A: I think JSPL is an interesting one. If you see the metal pack, many of them have moved and some of them are now even already playing major catch up role. So, you saw recently Tata Steel move quite swiftly, now you are seeing Sterlite , Sesa Goa , and Hindalco playing catch up. But one stock that hasn’t done anything yet, it’s not too far from its recent lows, is Jindal Steel. Yes, it’s weak, but suppose the stock were to move, it has a target closer to Rs 500.

I would watch JSPL right now in this fall. I think Rs 442 to about Rs 434 is a very important support. So, if it can hold this support zone then you can expect it to play catch up like some of the other names that have already moved. So, yes, a weak stock, one can take a punt on it, but with a strict stop loss maybe of Rs 430. It is possible that it could be a dark horse that plays sort of a catch up move, although the overall set-up remains pretty weak.

Q: What is the feeling you are getting about telecom? Is this just a technical rebound or is there more on the upside?

A: I am not a big fan of telecom right now. I think the last fall that happened in most of the stocks has damaged the charts. Maybe this is still a technical bounce, maybe some announcements are coming through and that’s why the stocks have reacted yesterday.

As far as Bharti goes, I am still not convinced on the rally. But I will be watching this Rs 319-320 where it closed yesterday as a very key level. That’s where it broke down. When it was trading at Rs 360-370-380 range, it would always come down to about Rs 319-320 and bounce from there. Once it broke Rs 319 a few months back, it cracked all the way to Rs 290-285 range. So that first becomes a key level for me. If it were to cross Rs 320 then I think this rally would even stretch upto Rs 345. So, it is probably a trading rally. I am still not totally convinced on the telecom sector.

Q: Capitals goods have had a pretty good run. What about something like BHEL technically?

A: BHEL has sort of tried to make a base around the Rs 200-210 range. We spoke about it two-three weeks back where I said the first target would be about Rs 227. It has crossed that. It still has a potential to probably rally upto Rs 242-247. Probably now you will work with a trailing stop, for me I am looking more like a 20-day average. So, if somebody is tracking the chart, he/she would need to track that on a regular basis. But right now around Rs 220-221 is where the 20 DMA is. So, I will keep that as a stop and let the stock continue its rally, maybe upto Rs 242-247.