See upmove in January; Nifty may test 6150: Anil Manghnani

The month of December has been flat for the Indian market. In an interview to CNBC-TV18, Anil Manghnani, Modern Shares & Stock Brokers says the Nifty is stuck in a range where 5,950 is still the key resistance. “On the downside, every time it comes closer to 5,800, maybe even up to 5,750, there is enough buying support,” he adds.

According to him, if all goes well then the market should actually go up in January. “If you look at the last four months, one month has been up and one month has been flat. We have already had an upmove in November and flat December. So, if all goes well then the market should actually go up in January,” he elaborates.  He further says if that big move will come above 5,950, it will open up targets in excess of 6,100 and maybe even closer to 6,150. Below is the edited transcript of his interview on CNBC-TV18 Q: What is the sense you are getting now? It has been a rangebound series. What are the initial indications for the January series? A: The Nifty is stuck in a range where 5,950 is still the key resistance. On the downside, every time it comes closer to 5,800, maybe even up to 5,750, there is enough buying support. I think the first day of December series was November 30. The Nifty closed at 5,879. It has closed yesterday at 5,870. So, actually the Option writers made merry last month. If you bought the Options, you did not make any money and even if you bought the Nifty Futures, you probably bought it at a 40-50 point premium. So, you lost out on all the premium. Having said that, if you are looking for a distribution pattern, it is still not clear because normally in a distribution pattern, you should not get so much movement in midcaps and smallcaps. Although the Nifty did nothing last month, the midcap index was up 4-4.5 percent. So, a lot of good money was made in December and so you cannot call it a washout. If you look at the last four months only, it has been one month up and then one month flat, so we have already had the November up and December flat. So, if all goes well then January should actually go up. If that big move will come above 5,950, it will open up targets in excess of 6,100 and on the downside 5,750 is still your major support. You have got a trendline, a nice channel at about 5,720. As long as that channel and the level of 5,750 hold, I do not think the overall trend will get disturbed. Q: Usually such long periods of range bound trading lead to a pretty big move for the market in either direction. If your call is it is likely a breakout what kind of trading targets should you keep going into January? A: If you are talking strictly by the channel, which now has a support at about 5,725 or so, then the upper end of the channel as we go into each trading day gets extended. Two days back it was at 6,120, today it is probably at 6,135-6,140. The more time it takes to get to the upper end of the channel, that channel will keep increasing by 5-7 points everyday. So, you are looking in excess of 6,100 and maybe even closer to 6,150, if the 5,950 can be broken. Q: You have picked out Kolte Patil from the real estate space on your buy list. That stock has more than tripled in the last four months. Would it be risky to buy it now? Would you still go ahead with it for a short-term call? A: The trade also is very well defined; it is a small stop and a small target. It is more of a trade rather than an investment call. I believe when a stock rallies so fast and then you get a first pullback, it normally gives you a trading move. Whether it makes a lower top, equal top or a bigger top is anybody’s guess but I am just playing for a pullback of 61.8 percent retracement.  So, Rs 108 which was the low of the last three days ago remains your stop. It is only a Rs 4 stop and you are playing for a pullback to maybe Rs 122. Q: You have got another trading idea which is Navneet Publications? A: It is another of the midcap ideas which has done really well last month with good volumes. I still think it has an unfinished target closer to Rs 76 and the stock had retraced yesterday from maybe Rs 70-71 all the way to Rs 66. I think it is giving a buying opportunity. If you are a strict trader then maybe Rs 64 is the stop or a little deeper stop would be closer to Rs 61 and then play for a target of Rs 76. Q: Any targets on NHPC? Have you been tracking that stock? A: Yes, I have. I have given that as a buy a couple of weeks back around Rs 23.50 or Rs 24. The first target is about Rs 27, but if you are looking more medium-term I think it is headed to about Rs 29. Q: Which are the heavyweights to watch going into January? Which will be the two or three make or break guys for the index? A: Most of the names have already rallied and now you have the laggards like metals that have done fairly well over the past fortnight. Although I am not a big fan of just going for a stock because it has not moved but I think you will have to bet on something, so Reliance Industries or a DLF, which have not really done much over the last couple of months. Those two names stick out just from the fact that they have not done much but again if you are going to break above 5950, then you would have to believe the banks are going to lead again, because that is where the major strength is. So if you have to pick a name from there then State Bank of India (SBI) would probably be a leader also. Q: You do not expect to see any more by way of selling in some of these heavyweight oil and gas names that you just spoke about – Reliance Industries, Cairn India, and ONGC, because yesterday we saw quite a bit by way of delivery based selling there. A: The dark horse would have to be Reliance with maybe a Rs 790-795 stop. I am not so positive on Cairn. I am little surprised at the way oil has rallied but Cairn has not done much, so that chart still suggests that it is headed to Rs 300-290 and to be honest ONGC has done nothing, forget the last two months nothing the entire year, so I do not think it is a stock that suddenly you are going to expect something major to happen. The entire subsidy burden story has kept it fairly subdued and that should continue for sometime. So your dark horse out there has to be Reliance. It is showing some signs on the chart that it is trying to breakout. There are rumours that maybe even the gas pricing might be adjusted higher, that could benefit but that is just a rumour right now. I will bet on Reliance, avoid Cairn or maybe even short Cairn, but avoid ONGC because there is just lack of momentum.