Will short Nifty at 5067: Anil Manghnani

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Will short Nifty at 5067: Anil Manghnani

The market has rallied spectacularly in 2012. Anil Manghnani, Modern Shares & Stock Brokers says, he will not be overly aggressive in going out and buying into the market now. “I wouldn’t mind to take a little punt on the short side at 5,067."

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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 Reliance BSE | NSE 29/05/12 Are Mutual Funds betting on Reliance? Other Stocks in this news ICICI Bank | Axis Bank | HDFC Bank | Maruti Suzuki India | Tata Motors | Mahindra and Mahindra | Bajaj Auto | Hero Motocorp | Bharat Heavy Electricals | Larsen and Toubro | Reliance Infrastructure | Reliance Capital | Reliance Communications |

The market has rallied spectacularly in 2012. Anil Manghnani, Modern Shares & Stock Brokers says, he will not be overly aggressive in going out and buying into the market now. "I wouldn't mind to take a little punt on the short side at 5,067. I know it will be counter trend against the momentum. But having rallied 500 points, I think the risk-reward maybe a little more in my favour now, if I were going short," he adds.

According to him, there is a lot of pessimism in the market. "There are not aggressive people in the market," he adds.

Also read: Now is not an entry point but time to exit at 5100, says 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 important would you consider the Nifty is moving past that 5,000 mark? How would you approach things technically now?

A: The way the rally has moved, it is probably still showing that there is a lot of pessimism. If you see last year's pattern, every time we bounced off a low, people were in a hurry to call that as a bottom whether at 5,200 or 4,700-4,800.

But this time around the rally is a little different. We are not seeing that optimism in the index futures. Even with such a big rally the future, premium has never gone past 10-15 points, maximum. We have had flat days also where the premium discount has been at zero. So that has shows there are not aggressive people in the market. That pessimism is leading it higher because more and more people are feeling left out. So, this rally is a little different than what we saw over the last whole year.

I think 5,067 is the 61.8 Fibonacci retracement, if you take 5,399 high and 4,531 low. So, at this point, I don't think I will be overly aggressive in going out and buying into the market. Probably as an early short going counter trend, I wouldn't mind to take a little punt on the short side at 5,067. I know it will be counter trend against the momentum. But having rallied 500 points, I think the risk-reward maybe a little more in my favour now, if I were going short.

Q: Technically, do you think it's possible that the market turns from this level and goes all the way down to 4,500 or is it possible that even if you see a correction, it is a shallower correction and then the market resumes it uptrend then?

A: I believe that you can never catch the bottom. It is the second move after the first rally that tells you whether the bottom is in place. I think a simple indicator would be a 50% move. If let us say you rallied for 4,531 all the way to 5,067, I think the 50% comes around 4,800. So that is the first level I would look out for to see actually if the market is stopping there and telling me something different, telling me that 4,530 is the bottom.

I am may not believe it's the bottom for the year. But in this move if I am trying to call the market bottom at 4,530 then the simple rule is take a 50% move and work with that. So, wherever the Nifty tops out whether it's 5,067 or lower or higher, you work 50% of the entire move. If it holds that then you can safely assume and go and buy for the next upmove.

That is a simplistic way. To try to predict that it is going to 4,500 might not be the order of the day. Just like nobody could have predicted that it will go from 4,500 all the way to 5,000 plus. I think sometimes you work too much on the levels rather than actually seeing and letting the market tell us what it wants to do. So, the first stop would look at is 50% retracement.

Q: Technically, how do you read Reliance 's chart?

A: I had spoken about Rs 792 on Wednesday. That has already come. Maybe it can stretch out to Rs 822-840 range, but that is a very strong resistance. Reliance hasn't traded above its 200-day moving average right since March-April last year. So, to expect to take it out in this move would be a little too much. So, I think Rs 820-840 max on the upside. But the first resistance this morning will still remain Rs 792.