Given that Union Budget 2013 will be announced in this month, the February series becomes very important for the market. For the February F&O series 6,100-6,150 still remains the key band for the Nifty on the upside.
In an interview to CNBC-TV18 Anil Manghnani of Modern Shares & Stock Brokers shared outlook on the market from a technical perspective.
Given that Union Budget 2013 will be announced in this month, the February series becomes very important for the market. For the February F&O series 6,100-6,150 still remains the key band for the Nifty on the upside. On the downside, significant breakdown can happen only below 5,900.
From a day trading perspective, first signs of correction may be visible if the Nifty closes 6,020. "The 20 exponential moving averages (EMA) is still the key level just from an absolute short-term. So that’s about 6,020ish odd."
Meanwhile, traders can look at 12,600 as a key level for Bank Nifty.
Below is the verbatim transcript of an interview aired on CNBC-TV18.
Q: The market has been looking a bit tired, but what levels are you watching as key supports on the index now below which you will get more cautious?
A: I think just from a day trade perspective or a very short-term the 20 exponential moving averages (EMA) is still the key level from an absolute short-term. So that is about 6,020ish odd. However, from a trend or if one is looking at for the whole month let’s say the February series - it is an important series because the Budget comes around this month but from a trend perspective 5,900, which is the last seven or eight months smaller channel that is working.
So, that will be the key from an overall medium-term trend and one the upside still that 6,100-6,150 remains the key band. If one is looking for a real breakout, it will happen above 6,150 and a more significant breakdown will happen below 5,900. That would be the broad range for February. As I said from a day perspective any close below the 20 EMA at 6,020 would suggest a first sign of a small correction.
Q: The Bank Nifty will probably be in focus today. What kind of levels and supports do you have slotted for that?
A: I think for now it is still holding up. The last move that one got in Axis Bank, in ICICI Bank has pulled it up once again, although, it did give up some of the gains on the Reserve Bank of India (RBI) policy day. I think 12,600 is still the key level just from a trading point of view. If it were to dip below that then maybe slip to about 12,200. However, now I think 12,900, since it has tested it a couple of times, becomes the key level on the upside.
Q: The big star yesterday was Suzlon Energy. Are you sensing a fundamental turnaround there in the way the chart has been working?
A: At least a technical turnaround, a few things happening on the chart after many months. If one look at the daily chart, the 50 day is trying to breakout above the 200. If one look at the weekly chart it is closely above the 50-week after many weeks and more exciting for me is the monthly chart; after many months it is giving a buy from a couple of angles. I think the relative strength index (RSI) is trying to breakout and what is more encouraging is, if one look at January volumes, it is higher since November 2009.
Therefore, over three years the stock has done nothing. I know the stock has already moved from Rs 17 to Rs 25 but that is what happens when it is totally under-owned and completely sold out, it defies logic – look at the Yen; from 75 it has gone to 91 in a jiffy. That kind of pattern is happening even in Suzlon. One may wait for a pullback because it has gone up so much, back into the Rs 24-21 range. However, eventually I am playing it more from a medium-term play, not a day trade. I think one could play for about Rs 31 at least in the initial stages on the stock.
A: I think Hindustan Unilever - even if I might to assume that Rs 450-440 is the bottom, one more retest because the way it fell on the result’s day with such big volumes would suggest that the first rally should not be the beginning of a new move. So, maybe back to around Rs 480-490 is a problem range right away. I would probably like a retest of Rs 450-440, make a proper base and then start to rally. However, immediately short-term, I am not too bullish on HUL. I still think a lot of people have shifted out of HUL into ITC, which suggests why ITC is still hanging around the all-time highs.
JP Associates, it is very close to a support around the Rs 82-84. Obviously with a fall from Rs 104 to Rs 80 odd the chart has become weak but if one is now stuck then wait for a clear breakdown below Rs 82, otherwise, just hold on.
Q: Have you got any trades on the metal space now? Are any stocks there looking vulnerable to you?
A: Yes, even though Hindalco Industries has come down quite a bit from Rs 130 to Rs 115-116, which is surprising given that the dollar has not done well recently. The dollar index has been falling, which is normally a bullish sign for metals. However, that’s not played out in Hindalco. The way the stock is trading below its 200-week, 50-week, 10-week, and 20-week averages suggests that if one gets even a minor rally in the dollar, this stock should fall first. So, the recent high, the last four-five days high has been about Rs 119-120. Therefore, keep that as a stop. I think the stock still has potential to slide all the way to Rs 106.Are you happy with your current monthly income? Do you know you can double it without working extra hours or asking for a raise? Rahul Shah, one of the India's leading expert on wealth building, has created a strategy which makes it possible... in just a short few years. You can know his secrets in his FREE video series airing between 12th to 17th December. You can reserve your free seat here.