5780 trading bottom, take risk and buy Nifty now: Manghnani

Technical analyst, Anil Manghnani, Modern Shares & Stock Brokers believes 5,780 is the key level one should watchout for on the Nifty. He advises to take risk now.

"One will have to take some risk right now rather than buy all on the breakout," he said in an interview to CNBC-TV18.

Below is the verbatim transcript of Manghnani's interview with CNBC-TV18.

Q: What do you think? Did yesterday marked the resumption of the upmove or it is too volatile to call?

A: Tough day to actually make sense of what happened. However, if I look at past history or take a little gutsy call here, I might want to believe that a trading bottom is in place. I agree that 5,780 is now the key level. 5,780 is 61.8 percent retracement of the move from 5,663 right up to 5,971. We came very close to that but what is amazing is with the volatility; one had huge volumes at the lower end. The large unwinding of Puts by foreign institutional investors (FIIs) suggests that they want to go long right now.

Therefore, I am a little tempted to believe that at least in the short-term, we might have put in a trading bottom at 5,780 or at least that is a stop going forward. The first key level obviously will be 5,971 because we have hit it a couple of times and fallen from there and then about 6,003, which is 76 percent retracement.

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However, to answer your question, I am a little gutsier to go a little long rather than short right now but that is more a hunch. But I think yesterday might have put in a trading bottom.

Q: You are buying the dips or you want a confirmation in terms of the market getting to somewhere close to the zone you mentioned of 5,970 etc before you can call it a clean trend?

A: Yes, one always like confirmations but then probably one will be little late into the entry. Then again, one wonders what will happen if it goes up to 6,100. I think one could start a little bit, take a punt, some stocks are outperforming; some stocks have already shown signs of bottoming out.

Remember, when the market, if it does, really takeoffs, many stocks come into play much later. So, maybe one can buy the Nifty now and then if the Nifty breaks out eventually above the 6,003 then buy stocks. So, it is a little tough call. However, I think one will have to take some risk right now rather than buy all on the breakout.

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Q: You are constructive on the market but you have got a sell call on Zee Entertainment. What kind of levels do you see there?

A: It is little bit of a risky call but Zee Entertainment has not fallen at all with rest of the market. Day before yesterday was the first real day when one saw a crack down with decent volumes. It has got a falling trend line at about Rs 220 so I think Rs 221 could be a stop. Maybe when it broke down a couple of days back, it suggested that it wants to go to Rs 195. However, a little bit of a risk involved, but one has got a well defined stop at Rs 221 so it is worth the punt.

Q: You have a buy on Reliance Industries (RIL) this morning?

A: I have gone for it purely because for the last four days with the volatility we have seen, RIL really did not crack with the rest of the market. It was more news based with what the banks were doing. RIL actually went and took out its recent pullback high. However, when the market was 5,971, RIL was a little lower than what it did yesterday. So at a much lower index, the stock is much higher, which suggests that if the market wants to go up, RIL should lead. So, it should be heading back to about Rs 900.

One can add another stock from public sector undertaking (PSU) banks. Look at State Bank of India (SBI), very interesting move yesterday. Again it took out the recent three-four day top and it has also taken out the big black bar high of the Budget day when it was Rs 2,250 or so. So RIL and SBI could lean on the way up at least from a trading point of view.

Q: What do you do with consumer names like Titan Industries and Jubilant Foodworks?

A: Jubilant Foodworks although looked weak, the way it has pulled back. Obviously, now wait and watch. I do not think one should short it right away. The problem with Jubilant Foodworks is probably with a lot of the stronger hands, whether it is the FIIs or I am not sure who, but they generally come and support this stock.

However, Titan is a worrying one for me. They had some crucial levels at Rs 236-232. It has broken below those. So, if it closes below Rs 232 today, which is a weekly close and that would definitely be negative for another 10 percent downside so yes, more worried about Titan.

The other one that is very precariously placed is Bata India, Rs 753 is the major 20 month moving average and Rs 743 is the 100 week average. However, if Bata breaks Rs 743 then there could be problems for that stock also.

Q: On the way down, what kind of levels are you watching? You were talking about the targets you have set on the upside but what would point to you that the market is beginning to break down again and has not put a durable bottom in places as you were earlier suggesting?

A: I think yesterday’s low, although it is 5,791, I will give it 5,780. Like I said it is a 61.8 percent retracement. So as long as it holds 5,780, fair enough. Ideally, 5,817 is the 50 percent retracement and that is more important, but just because we dipped below and bounced yesterday with the huge unwinding of Put positions suggest to me that that could be the logical trading bottom for now. So, 5,780 if one is a Nifty positional trader would be a stop loss.