Market to correct & then rally around 6100: Anil Manghnani

In an interview with CNBC-TV18, Anil Manghnani of Modern Shares & Stock Brokers, spoke about his reading of the market and his outlook.

Below is a verbatim transcript: Q: Give us a word on the index and what kind of targets you are pitting now on the upside for it? A: I have been maintaining for quite some time that after the Nifty broke out above 5,950, there has been no sell signal yet. The first clear target was about 6,100. So, I will stick with that. At 6,100, I would like to see what the market does before taking a new fresh call because above that it opens up closer to the all time high. My gut feeling is we should pause somewhere around 6,100, give some sort of a meaningful correction and then we will see resumption of the rally. I am not sure how it will play out right now but I would like to see what the market does at 6,100.
 
Yesterday was an interesting day as there was some confusion because at a new 52-week high, you had an advance/decline ratio of 1:1, which is not typical of a new high or a bull market high. About futures, like I have been mentioning in December where you had 40-45 point premium throughout the month, we still got quite some time to go to expiry. However, at a new 52-week high 20-25 point premium is a little bit of confusion. I think there are two ways to look at it. If you are a bull, you will probably say there is no euphoria yet so maybe there is a lot more upside till the euphoria sets in and then the market corrects. If you are a bear, you will probably say, there is no real buying interest coming in at 52-week high. So, I am not sure what to make of that but that is the only confusion in my mind having looked at yesterday's trade. _PAGEBREAK_ Q: Any thoughts on telecom that suddenly moved yesterday? A: I have maintained in the past -- out of the pack -- Idea Cellular still looks the best. It has given a fresh breakout at Rs 112. I think there is some upside post Rs 112. The next target is Rs 132. Eventually it could head to all time high of Rs 160. However, we need to see what happens at Rs 132 first. Bharti Airtel is still a difficult one for me to call. I am not sure what is going on the chart yet. It is trying to breakout but I have still not got clear patterns of a breakout. For now, about Rs 360-370 would be the immediate trading target. I would like to give it some time before I go out and say now it is a fresh breakout on Bharti. Q: You are getting a bit cautious on the banking names, the public sector undertaking (PSU) banks like Punjab National Bank (PNB) now? A: I went with one sell call just from the point that at 6,100, the market will find resistance. So I try to balance it with one buy, one sell. The reason I went with the PNB is slightly more different. If you look at the move 4-6 sessions back when it first hit Rs 920, the volumes were huge. However, if you look at the move now when it has bounced back over the last couple of days above Rs 900, the volumes have shrunk disastrously. It tells me that now trying to sustain above Rs 900 is going to be difficult for the stock. I am putting Rs 920, the recent high, as a stop loss. I think first we will see a retracement to Rs 870-860 range. Q: The stock that you are going long on this morning is Tata Steel? A: It is more like a day trade on Tata Steel. The stock has corrected from about Rs 445 to Rs 413. So, it is due for a pullback. I think it started it over the last couple of days. There may be some upside around Rs 429-432 for the day and I have kept yesterday's low as a stop loss at Rs 421. Q: In a short-term, is there anything in technology you would still be long on? A: Although I know Rs 2,800 is a key level on Infosys -- given the volume and the way it broke out on the results day, if it goes back and closes above Rs 2,800 -- more of a short squeeze could set in right up to Rs 2,950ish or so. I am not banking on it happening but it is a possibility just based on what happened post the numbers. Tata Consultancy Services (TCS) may be done for now the way, it has reacted after opening gap up and giving up all the gains. HCL Technologies could stretch out to about Rs 700. The dark horse out there could be Wipro. That has been inching up very quietly without too much noise or many people talking about it. So that could put on 5-6 percent. Hopefully, the numbers are better than expectations like we have seen with TCS and Infosys. Q: We have been talking on and off about the Bank Nifty, how is that tying in with your index view? Do you still see strength on the Bank Nifty? A: Bank Nifty continues to make 52-week high. So it is in sync with the broader markets. I do not think anything out there suggests an immediate correction. Just like I mentioned, you trade the Nifty with a stop of 20 exponential moving average (EMA) that is at about 5,950, you keep Bank Nifty 20 EMA as your stop – though I am not sure what the Bank Nifty 20 EMA is, you can check that. As long as it holds that, just like the broader market, it should continue to rally.