Sun Pharma, TCS pushing Nifty up; where are beta stocks?

Though the Nifty hasn't broken down, the current market movement is worrisome says, analyst, Modern Shares & Stock Brokers, Anil Manghnani.

Manghnani opines the defensives holding up the market is a casue of concern. "It is not a typical bull market where beta stocks too are moving. What stocks are close to their highs - ITC, Sun Pharma, TCS, are not names that one associates with the big bull market. So, it is a little worrying that we are back to defensives that are holding the market and not beta names," he says.

On specific stocks, Manghnani is bullish on Reliance. He expects a pull back in the stock. "It is headed back to Rs 894-905 for now and if the Rs 857 recent low is a stop, then it can go higher. If it is going to cross Rs 905, we can work for higher targets but atleast for now, if the Nifty inches back to 6000 levels, Reliance should lead," he adds.

Below is the edited transcript of Manghnani's inteview to CNBC-TV18.

Q: Technically, how would you call the next couple of days for the market given the trend we have seen this week?

A: If you are just looking at Nifty, one would probably say it is holding 5900, sop it might pulls back to about 6000. However, I think the broader market which a lot has been spoken about, is the worry. For a three percent correction in the index, so many stocks are down anywhere between 20-30 percent. Those numbers keep getting worse each day. So, I think there is a complete disconnect like we have been mentioning for a while. That’s the most worrying part, because if one looks at what is holding up the market nowadays, it is back to defensives.

It is not a typical bull market where beta stocks too are moving. What stocks are close to their highs - ITC, Sun Pharma, TCS, are not names that one associates with the big bull market. So, it is a little worrying that we are back to defensives that are holding the market and not beta names.

The number of stocks that keep adding to the beaten down list or now the sectors, just keeps getting bigger and bigger. So now, cement has collapsed, capital goods is coming down and then regular names like realty, infra, metals, PSU banks too have collapsed. So a lot of the high beta stocks have just completely collapsed which is a major worrying sign for the market. So, though the Nifty has not broken down, the stocks are the real issue out here. 

Q: What about Reliance? For a moment it looked like post results it was going to power ahead above Rs 900, get to Rs 1,000 but it has just been consolidating in Rs 850-900 zone. Any prospect of a breakout there?

A: I am expecting atleast a pull back to start here. I think where it hit Rs 857 is a 50-day moving average and the 50 percent correction of the recent move. So, I think since it has held that and it is starting to bounce, inching up with the market which is not a bad sign if Reliance tends to lead. It is headed back to Rs 894-905 for now and if the Rs 857 recent low is a stop, then it can go higher. If it is going to cross Rs 905, we can work for higher targets but atleast for now, if the Nifty inches back to 6000 levels, Reliance should lead.