5250 key support from trading perspective: Manghnani

Nifty ended the August series on Thursday at 5,315 level; however, it erased yesterday's gains and entered the first day of September series below 5,300 level.

Technical analyst Anil Manghnani, Modern Shares & Stock Brokers sees the level of 5,250 as an important support for the Nifty from a trading perspective, but for the entire September series 5,190 would be a major support. If Nifty breaks below 5,190 then, the market would lose all momentum, he added. "The first immediate resistance from a trading perspective is seen at 5,350-5,375. But for a bigger move than that 5,450 becomes a major resistance. So that sums up the whole Nifty range for the month of September," he added. Below is the edited transcript of Manghnani’s interview with CNBC-TV18. Q: What are the indications that you are getting for the September series and how you should position yourself at the start? A: We spoke about 5,250 couple of days back, so no surprise that the market went there and bounced from there. That’s the major 50 day moving average. So, from a trading perspective remains an important support. But when you are looking at the entire series in totality, 5,190 becomes a major support. The market needs to hold that, if it breaks below, then it would lose all momentum. If you take the 4,770 low and the 5,448 high, the 0.382% Fibonacci number comes at about 5,190. If you take the 5,032 low with a 5,448 high, the 61.8% also comes at 5190. And the other two important levels, there is a 200 EMA which is also around that 5190-5200. If you connect the 4,770 bottom to the 5,032 bottom and draw a trend line that also comes around the 5195. So, there is a whole cluster of supports between 5190-5200. In a bigger move if the market were to correct little deeper, that needs to hold in September to maintain any sort of up move. Now on the way up the first immediate resistance becomes 5,350-5,375 from a trading perspective. But from a bigger move than that 5,450 where we fell off from, that becomes a major resistance. So that sums up the whole Nifty range for the month of September. Q: The Bank Nifty has been quite vulnerable. Do you see more pressure in the September series on the Bank Nifty? A: It is possible. I mentioned a couple of days back that index that was 300 points higher from the July lows, but the Bank Nifty was back at its July low. So, this index has been leading every rally. It shouldn’t be underperforming the Nifty by 5-6%. If any of your fears do come true with the Coalgate scam and NPAs, this sector could take it on the chin. Because if you take it over an 18 month period this is one of the sectors where lot of longs have been built up in every rally.  I am sure people still have a lot of positions just not on the F&O side, but in the cash market side also. So, this is the one that I fear. For now I am still looking at 9,800-9,900 as the major support on the CNX bank Nifty. But hypothetically speaking, if the market breaks 5,190 then logically since this has been the weak sector even with the market not having corrected that much, by default it would fall sharper. Be careful in the September series. If the market does break 5190 then your first short has got to be the Bank Nifty and the Bank stocks. If you look at it over the last 10 days, the first 15 days was mainly PSU banks, but the way ICICI, Axis, IndusInd, Yes Bank have corrected in the last 10 days, makes you believe that now that selling pressure is coming on to the private sector also. I am little concerned if the Nifty breaks down that the Bank Nifty could really go much below 9,800. But for now I just look at 9,800-9,900 as the major support. Q: There were some interesting moves on MTNL yesterday, it tank 20% post multiple block deals. You would choose to buy into that one today? A: I am not saying it to buy at Rs 36 because it did touch somewhere around the Rs 33.50 mark yesterday. If it gets back to yesterday’s lows, it warrants a little bit of a punt no doubt because the stock has moved so much and the first fall normally after a big move is buyable. I am taking a little lower Rs 33.50 to about Rs 30.50 range. May be a stop loss of Rs 29.50 and a pullback to Rs 40-41 level is possible. Don’t buy at Rs 36, wait for a dip back to Rs 33.50.