Wait for 5-6% correction to buy pharma stocks: Manghnani

Anil Manghnani of Modern Shares and Stock Brokers said he would wait for a bit of correction, may be about 5-6 percent on pharma stocks before buying them.

Manghnani told CNBC-TV18, “I probably would wait before buying defensives. I think even they are in a mini correction mode. Yes, the longer term chart wouldn’t have changed. But from the shorter term, the fact that Sun Pharma went below Rs 700, would make me wait for a deeper correction. I am sure there will be something attractive on the downside.”

“If the Nifty were to close below 6000, then even some of the defensives would correct. So, yes they look okay, but I would wait for a bit of correction, may be about 5-6 percent even on pharma stocks,” Manghnani added.

He said, “The one that could be interesting is if ITC crosses Rs 300. Although I had a feeling that it was in a mini-correction, I think the Hindustan Unilever (HUL) results could have changed the situation where one is going through that phase. For example when Infosys did with Tata Consultancy Services (TCS) over the last four quarters; where every time Infosys numbers were bad people would buy TCS and sell Infosys. So, you could have that situation given what happened with HUL post the numbers where people are now lapping on to ITC.”

“Remember when ITC’s numbers came out, the stock didn’t do anything for two days. It is only post HUL numbers that the reaction started to inch up. So, if ITC closes above Rs 300, it would probably give a fresh trading breakout atleast. Hence, that is one more on the defensive side that I am watching out today,” Manghnani said.