Nifty is pausing; buy below 5750-5800: Anil Manghnani

The Indian market has been rangebound for many sessions now. It is facing strong resistance around 5,950.

In an interview to CNBC-TV18, Anil Manghnani, Modern Shares & Stock Brokers says the market is taking a pause. "If we were to get a correction back into the 5,800-5,750 range, it still remains a buy-on-dip market," he asserts. According to him, the Nifty is a no trade zone. "If I have to play for the next big move, I would like to see a close above 5,950. If you were to get a bigger fall because global factors, I think then at 5,800 or 5,750 range, you start buying the calls. That would probably be a better option," he adds. Below is the edited transcript of his interview on CNBC-TV18 Q: How would you approach the index, given the global context this morning? A: It is still in a range. It is not taking out 5,950, which is a key resistance level. Interestingly, we were at 5,900 even on December 3. There were great expectations for December, especially at the beginning when we were already at 5,900, there were calls for 6,100 and beyond, by the end of this year. Obviously, that is a little disappointing, but you have to take it in full context. The market had rallied from 5,550 all the way to 5,960. So, we had a 400-point rally. Even while the Nifty was doing nothing over the last 10-15 sessions, stocks have done well. Stocks have even caught up; whether it is high beta, whether it is realty, metals, all have had a good run. Although the market has not moved, atleast the stocks have played catch up. Every time you make a new high and then you go sideways for ten days, the question of distribution arises, but it is still too early. If you look at the chart, it does not suggest distribution yet because normally in a distribution market, you do not see sectors outperforming. You do not see high beta sectors like metal and realty doing well. Normally, when it is a distribution where the Nifty is not falling, you get a few continued sessions of negative advance/decline ratio. But that is not happening. Although you have an odd day, when the market has negative advance/decline, but for more days you have had it positive and for more days you have had smallcap and midcap doing well. There is still no suggestion of any distribution pattern. It just tells you that the market is taking a pause. It is trying to decide whether it wants to take out 5,950. The overall set-up remains that if we were to get a correction back into the 5,800-5,750 range, it still remains a buy-on-dip market. Q: Some of your peers have been making the point that perhaps the Bank Nifty has started giving shorting signals now, do you agree with that? A: I think the Bank Nifty is in sync with the Nifty. 12,500 is the key level for the Bank Nifty. It does keep going above that level but does not sustain or close above that. If the Bank Nifty starts closing above 12,500, it opens up a target of 12,800. I believe it is still a little stronger than the overall market. The Nifty is not going above 5,950, at least the Bank Nifty intraday trades above 12,500. I do not think there is absolute clarity on whether it is a short right now. Q: You have got a trade on Larsen and Toubro (L&T) this morning? A: Yes, I think the stock has been underperforming the market continuously and has been sliding even while the market has been doing well. Although the stock has already fallen and maybe it is a little risky to short, but I think there is some more downside. Normally when the market falls, the weaker ones should fall first. I think it is headed to about Rs 1,568 which is a 20-week moving average and the stop loss would be yesterday’s high which is about Rs 1,643. Q: The interesting midcap pick in your basket today is United Bank of India? A: I am trying to look for banks because overall the sector is still doing well. There is a lot of buzz. I took a price little lower than yesterday’s close because it does not fit in my risk reward ratio if I have a target of about Rs 85. Although it has closed at about Rs 77, you wait for the pullback, maybe closer to Rs 74 and right upto Rs 69, which is the 50-day moving average. So keep a stop of about Rs 68 and then play for a target of Rs 85. Q: As a positional trader, any call that you would take going into the next series because we are going to have an expiry soon? A: I would still say it is a no trade zone because if I have to play for the next big move, I would like to see a close above 5,950. If we were to get a bigger fall because of what is happening globally, then at 5,800 or 5,750 range, you start buying the Calls. That would probably be a better option.