On upside, 5700-5750 key resistance for Nifty: Manghnani

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 Hexaware Tech See messages about Hexaware Tech Hexaware Tech BSE | NSE 29/05/12 Are Mutual Funds betting on Hexaware Tech? Other Stocks in this news Geometric | Mastek | Mahindra Satyam | Infrastructure Development Finance Company | Infosys | Tata Consultancy Services | HCL Technologies | Shree Renuka Sugars | Zee Entertainment Enterprises | Punj Lloyd |

After five days of continuous up movement in the Nifty it is not surprising to see the midcaps, smallcaps coming into the limelight. One may expect this to continue since these stocks were beaten down and hadn't participated in the initial move from 5,200-5,700, said Anil Manghnani, Modern Shares & Stock Brokers.

"From a trading perspective 5,575, is the first key support level and from a positional point of view it is about 5,510. On the upside, 5,700-5,750 still remains the key resistance zone for the Nifty," he added.

He is bullish on Hexaware , Mahindra Satyam and TCS . "HCL Tech and TCS would have enough buying interest  every time there is a serious correction. For, Infosys I still think it's just a technical pullback I would look to sell in this move even if it rose before the numbers."

Houseviews: Three stocks that brokerages are bullish on

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

Q: Still good with the uptrend or is the market looking for a bit of a halt here?

A: It is in line with what we expected after the expiry where you had five days of continuous up movement in the Nifty and lot of the largecaps. It is not surprising to see the midcaps, smallcaps have come into the limelight. A lot of them had to really play catch up.

They were very beaten down and hadn't participated in the initial move from 5,200-5,700. So, you can expect a little more of that. Even if the Nifty drifts down initially since you have had such a big move, the first fall will always get enough buying support because lot of people would have missed out the rally.

So even from a trading perspective 5,575, is the first key support from a positional point of view about 5,510. So, even if you get there you would find enough buying support. On the upside, 5,700-5,750 still remains the key resistance zone for the Nifty.

Q: From a medium-term perspective if you had to bet either above 5,750 or below 5,500 on a slightly bigger trade which one would you plump for?

A: It is tough. But given that we have already rallied 500 points, ideally it would be good for the market, just healthy if it can come back to 5500, get some more people in and then you get more fuel to the rally. Right now, although the FII Numbers are great but a lot of stocks have hit some key resistance levels, so there are less and less stocks that can take up the market now. So ideally,a pullback to 5,510 and then a resumption of the rally would be more the order for the day right now.

Q: Have you taken a look at Hexaware, Geometric , Mastek ?

A: Hexaware is an interesting one because even when the market has rallied, it continuously goes and makes a newer high, if one looks at the last six- seven months chart. So that is an interesting one. It will continue to do well. Every dip is a buying opportunity. 

But more than the other ones, I have been mentioning Mahindra Satyam for the last 3-4 weeks all the way from Rs 75, I think that stock is an interesting one. Because people may argue that Rs 6 stock when it crashed a couple of years back is at Rs 90. But if you look at the other way, it is still a Rs 350 stock post the whole scam broke out.

So that stock is still available at Rs 90 and what it has done is it has finished all the pain, the consolidation even though it went from Rs 6 to Rs 124 and back to Rs 54 that whole period the chart was still very weak. But now the monthly and weekly charts, all have begun to improve and show very good signs of strength.

That is one you would buy on every dip, I think in this move at least Rs 100. But from longer term point of view if you are willing to hold it, it can even give you Rs 150-160 target but that is still down the line maybe in six months to one year. So that looks more interesting because its still a Rs 300 stock available at Rs 90, if you consider what it was in 2009 January.

Q: A quick word on IDFC you see downside for now?

A: Although it went and retested the February bottom of Rs 110, from Rs 110 to nearly Rs 140 that is a big move. So Rs 138 -146 range is a shorting area for me and back to Rs 128-122 is where  the stock will come and retest.

Q: How is the CNX IT looking to you going into the earnings next week of both Infosys and TCS?

A; I think it is a mixed bag. To start with Infosys, the day it crashed right after numbers, it closed around Rs 2,990 as such, so you had a whole quarter and the stock is back pretty much where it closed sort of 10% down on the  result day.

The stock hasn't done anything; I still think it's just a technical pullback. I agree that Rs 2,977 and Rs 3,060 or somewhere in this range, it will top out and then again resume its downward trend. The overall charts are still weak; it's just a technical bounce. So up to Rs 3,060 fair enough and then, a pullback again.

TCS looks a little stretched at Rs 1,200. But when you convert it to the monthly chart, all it says is if you get dips like you had one recently when the stock corrected all the way to Rs 1,050-1,060 levels you will find enough buyers.

Similar set up is HCL Technologies; it may have stretched out, now back to Rs 507-515 is the resistance range but two weeks back the stock was available at Rs 440. These two stocks TCS and HCL Tech, every time there is a serious correction there will be enough buying interest. Infosys I still think it's just a technical pullback I would look to sell in this move even if it rose before the numbers.

Q: Two stocks which eased off yesterday, Shree Renuka from sugar and Zee from media, how are those technicals looking to you?

A: For Shree Renuka if you look at the overall, this chart was completely damaged. The whole sugar pack was hammered down. After the initial bounce you still need a pullback to confirm that the bottom is in place. So, if a stock rallied from let us say, Rs 56 to Rs 74 that is about Rs 18, at least a 50% pullback would be in line. So, back to Rs 65 is normally what you would expect and then a continuation of the rally.

It is similar to what happened to Punj Lloyd , even though it had that great move from Rs 50 odd, 18% one day to Rs 70, it gave a pullback all the way to Rs 60-61 and then sort of consolidated and moved up. So, maybe a similar set up is happening in Shree Renuka but a little early to say. If I were to buy then I would wait back for Rs 65-66. For Zee, I haven't seen the chart this morning.

Q: The start is positive, it is just about flat at 5,635 but what kind of a trading strategy would you adopt for the next few days till you get clarity within this trading range?

A: Still buy the dip in the Nifty, maybe not at these levels because the upside still is tricky 5,700-5,750. But if you get a downside day maybe back to 5,575 as a trader but ideally 5,510 as a positional player, you could play for that bounce. I still think midcaps will play catch up for the next 2-3 days.

Interesting thing, I harped about it for a long time it is still not playing out the way I thought it would is the dollar index. Very interesting the S&P rallied Thursday, Friday, the dollar index was flat which is a rarity. Yesterday actually commodities had a fantastic day. Crude went up 2-3%, gold went up about USD 28 but still the dollar index was flat. So is that an early sign that the dollar index is bottoming out? - I am not so sure, I don't know yet. But I am keeping an eye on that.

If the dollar stops falling even on days when the markets rally and the commodities rally that would be an interesting thing to take forward. This is because if that starts to rise, then it will be difficult for equities and commodities to have a field day like they have had over the last six- eight months at least in the US.