5,835 key resistance for Nifty: Anil Manghnani

In an interview to CNBC-TV18, Anil Manghnani of Modern Shares & Stock Brokers, spoke the and shared his outlook on various stocks.

Below is a verbatim transcript: Q: Would you advise a fresh long position at the start of trade and do you think the Nifty is ripe for a further pullback despite what we saw yesterday? A: If it opens another gap-up, let us say 20-25 points like the SGX is suggesting, maybe initially your risk reward does not fit because that would already have been a rally of about 140 points from the recent low closer to 5,660. My gut feeling is that somewhere around 5,835 is going to be the crucial first steps for the market. It is the actual breakdown point we had talked about 5,830 being a major support. Once it broke below that then you saw a sharper fall. So, logically what was the support should become a resistance. It is also the 38 percent Fibonacci retracement of 6,111 and 5,663 and is also the 100 day moving average, the 20 day exponentials. So a lot of resistance coming up out here. I would like to see what the market does at 5,835 first before taking a call. My gut feeling is we will probably pause there, give you some sort of a proper pullback or retracement of the recent move and then confirm that the bottom is in place. So maybe today wait and watch but the next fall if it supposedly holds 0.5 or 0.618 percent retracement of the recent rise then you probably go long. Q: In the IT space, there are fresh highs that stocks like HCL Technologies and Tata Consultancy Services (TCS) have hit yesterday but you choose to buy something like Tech Mahindra today? A: I think stock is still very strong and it has come down over the last couple of sessions. So it is a buying opportunity for me. I feel the stock should go back to Rs 1,130-1,150 range maybe with the stop of Rs 1,030. However, even from a longer-term point of view, this has the potential to do what an HCL Technologies or TCS is doing. I know Rs 1,150 is a major problem but if it takes that out, it could eventually become Rs 1,350 stock also. So for now, just a trade call but it could even be a long-term call. Q: Aside from what you are seeing on the daily trading basis, what is your own sense of what the medium-term is trending towards, is this the market that seems to be breaking down with the odd trading rallies like we saw yesterday or do you still believe that there is potential in the medium-term for the market to turn around? A: I think the discrepancies between the two -- whether it is midcap and smallcap on one end and then you got your largecaps at the other end because if you are already back to 5,800 that means you are hardly down 6 percent from the top. However, if you look at the midcap stocks or the smallcaps, they are down 30-70 percent. I think that is the problem. The broader market needs to start improve. I do not think there is so much issue as far as the Nifty is concerned. I think for the short-term at least, I would think 5,500-5,600 range would still be the major support, major floor for the market. I will be very surprised if the market were to go below that. I think for now if you want to retest 6,100 or beyond then 5,950-6,000 range becomes the key resistance. So, you are still in a trading range for now. But because we got so oversold on many indicators that is why the nice healthy bounce of yesterday which might even continue towards maybe throughout the day or at least the first half of the day looks pretty good.