With better breadth, need beta play to drive mkt: Manghnani

The market is in a technical pullback after it bounced off 5850 opines Anil Manghnani, analyst, Modern Shares & Stock Brokers. He will be waiting for the market's key test to come between 5985 and 6015 rather than taking a fresh call on the Nifty. Manghnani, however, says he is optimistic with the market breadth now turning positive.

Manghnani, in an interview to CNBC-TV18, shares his view of defensives holding up the market. He says FMCG sector and pharmaceutical sector are driving the market. This, according to Manghnani, is unfortunate.

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"I would like to see a little more of the high beta names, especially banking to participate and more so not just the private sector. It is more of PSU banks that need to bounce. So, one needs to see a little follow up especially in banking. Otherwise, for now, it's a little too defensive for me," says Manghnani. He sees more enthusiasm flowing into the Nifty with a better breadth and hopes of more retail participation and trader interest.

Below is the edited transcript of Manghnani’s interview to CNBC-TV18.

Q: What are your views on yesterday's pull back on the index?

A: The market held very close to the 20-week-average on Friday where the average was around 5830. It bounced off somewhere around 5850 so, that’s a good sign. What is more important is that in the last couple of days, the breadth has been positive. So, maybe a bit of a follow up to that would be a lot more encouraging. For now, I would still see it as a technical pullback and maybe take a fresh call a little later. I would like to see what happens at somewhere between 5985-6015. That’s going to be the first key test. However, atleast the encouraging sign is that the breadth has turned positive over the last couple of days.

Q: Any particular sector that stands out in terms of the one that could help the market move ahead because yesterday, IT did little bit to support trade?

A: Unfortunately, it is still the defensives that are holding up the market, be it IT. Hindustan Lever has now bounced back from Rs 450 levels so again it’s FMCG helping the market. Pharma continues to support in the form of Sun Pharma. So, I think it is still the defensives driving the market.

I would like to see a little more of the high beta names, especially banking to participate and more so not just the private sector. It is more of PSU banks that need to bounce. Then there will be more enthusiasm about the market considering the breadth is already better and then more of retail participation and trader interest would come back. So, one needs to see a little follow up especially in banking. Otherwise, for now, it’s a little too defensive for me.

Q: Sun TV has been lying low for a while but you are buying that one today?

A: Yes, I am buying it as a trade. If you look at the last five days, it has hit the 50-day-average and held on everyday on a closing basis which is about Rs 435 now. It has already had a little bounce yesterday. However, I think this bounce will stretch. So, maybe Rs 460-465 also should be possible. Keep the 50-day-average as your stop. This has been one of the stronger stocks in the market. So, if the breadth and the overall market improves, I think strength should do well for us. That’s why Sun TV would be on the buy list today.

Q: You have got a buy call on Tata Global this morning?

A: It is another stock that has really underperformed with the market. It has corrected quite nicely from Rs 180 all the way to Rs 137, but it has now taken support at the 200-day-average. I think Rs 138 being the 200-day-average as a stop, this stock probably is now in a short term upmove. So, Rs 153-159 is where I think the stock should go now.