See key level for Nifty at 5100: Anil Manghnani

In an interview to CNBC-TV18, Anil Manghnani, Modern Shares & Stock Brokers says, it’s very difficult to talk about the entire month. “On Monday, it was all gloom and doom where everybody was talking about sub-4,800 and yesterday everybody was talking about 5,300. So, the news flow is such, the environment is such that things tend to change very fast,” he elaborates.

According to him, 5,100 is going to be a very key level for the market. “There is a lot of Fibonacci numbers coming out there. There is a lot of moving averages also coming at that point. If you take the last three-four months, we have had a host of lower tops. If we joined the trend line from all the tops, it also is coming at about 5,097. So, for me, 5,100 is going to be the first major test for the market in this pullback,” he asserts.

Also read: Bank Nifty may outperform; buy banks on dips, says Sukhani

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

Q: How would you play it from beyond this 5,000 level? Is the best of the pullback behind us or does this one have more steam to it?

A: It’s very difficult to talk about the entire month. On Monday, it was all gloom and doom where everybody was talking about sub-4,800 and yesterday everybody was talking about 5,300. So, the news flow is such, the environment is such that things tend to change very fast.

My personal opinion is 5,100 is going to be a very key level for the market. There is a lot of Fibonacci numbers coming out there. There is a lot of moving averages also coming at that point. If you take the last three-four months, we have had a host of lower tops. If we joined the trend line from all the tops, it also is coming at about 5,097. So, for me, 5,100 is going to be the first major test for the market in this pullback. Let’s assume it doesn’t cross it right away, maybe even if it tests it, a pullback probably to 4,950 would be the first sort of move post this sharp rally.

Q: So that’s where you would keep your stop losses because of how unpredictable this move is, if you wanted to go long.

A: You protect your downside. So, suppose you bought let’s say 5,000 shares or something, you go and sell 2,500 right away and then you look to cover that back when the market does give a pullback. I think the problem with stop loss now is because the market has moved so much, the stop loss is going to come too far down. So, the easier way is to sell half. That protects your downside.

Q: We saw big moves coming in on the banking space. You have a sell on Bank of Baroda for the morning. Do you think the run is done over there?

A: I think Bankex has led the rally. But at 10,050 or so, I think we are at 9,950, the CNX Bank Nifty has a lot of resistance. It is a very similar downward sloping trend line like the Nifty and also the major retracements around the 10,050 mark. So, I would feel now that the market has already rallied and something needs to come down.

A lot of the movement in the Bankex and some of the banking stocks are done. For me, I think Bank of Baroda will be the first one to look to short. I wouldn’t short it here. But what it’s done is it’s done a classic doji pattern where you got to short below the low of yesterday, which is Rs 710. So, if it takes out Rs 710 on the downside, you short with a target of Rs 671 and stop of yesterday’s high at Rs 728.