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Excerpts from Bazaar on CNBC-TV18 Watch the full show »
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- See previous views by Anil Manghnani
- See what other Experts Brokerages are saying about Hindalco
- See messages about Hindalco
Market continued with its relentless upmove on Wednesday morning, opening above the 18000-mark first time since August 4, 2011.
According to technical analyst Anil Manghnani of Modern Shares Stock Brokers, market has a reached a point now where one should look to book profits.
“I am looking at 5,460 odd as a next breakout. That’s the 20-month moving average. If Nifty takes that out, then its suggesting that another probably 5,650-5,700 could be the next range,” he told CNBC-TV18.
Below is a verbatim transcript of his views on CNBC-TV18. Also watch the attached video.
Q: How are you approaching trade on the index?
A: It is surprising that we have been in such a tight range for the last six-seven sessions. The SGX Nifty is up but something has got to give in today or in the next couple of days. So I am looking at 5,460 odd as a next breakout, which is the 20-month moving average. If it takes that out then it suggests that again another probably 5,650-5,700 could be the next range. So watch for a close above 5,460 for the next breakout.
Q: Are you surprised that the markets are running without any kind of correction just periodic bouts of sideways consolidation?
A: Yes, I will have to say so; I mean that’s not been the typical rallies of the last 15-16 months. Post 600-700-800 points on the Nifty, you do get corrections. I think it is global liquidity that is driving the markets. All the bad news that is coming out is getting absorbed, be it weak IIP data or European downgrade, the market globally has been ignoring it all. So I think there is a lot of buying pressure that is pushing up the market. So to answer your question, I am a little surprised that it has been a one-way move and not a step formation where you get 200-300 point correction and then resumption of the rally.
Q: Are you positive technically on yesterday’s star – Lanco ?
A: I think it’s a continuation move of yesterday. If you look at most of the market, stocks are after crossing over the 50-day moving average to rally to the 200-day or 50-week moving average. So I think there is still some more upside in Lanco, Rs 21 to Rs 22 in this move should be the next technical target. So you can still play for it and this is a heavily traded FO stock so you may see another continuation. Given the fact that the market is trying to breakout today, some of these infrastructure names that have been flying all over the place could add on another 10-15%.
Q: Any thoughts on some of the smaller PSU names like Syndicate Bank, Andhra Bank, these stocks have had 16-17% rallies through the course of the week?
A: When you look at the overall setup, most of the stocks have already crossed the 200 day moving average. When I look at that setup and refer to what I saw last year, where every time the Nifty rallied to the 50-day or the 200-day moving average, it still collapsed because the 50-day never went back above the 200-day in the Nifty or the Sensex. So for me to believe that these can just keep rallying is a little far fetched I think when you take the breadth of the market, over 90% of the stocks now are quoting above their 200-day which suggests that the market is getting stretched more and more. So I probably say maybe play out another 5-6% but don’t expect more than that on some of these stocks.
Q: You have got a sell on Hindalco as well this morning?
A: I think if you look at the dollar index, it is now starting to inch up again after hitting about Rs 78, it is starting to move again above Rs 79. So I think that could be little dampener for some of the metal stocks. So, Rs 165 to Rs 175 could be a problem area for Hindalco; and then post that a correction back to around Rs 150.
Q: Where do you stand on infrastructure argument and how are you trading some of these stocks?
A: I think the market is telling something else because regardless of any of the negative numbers; maybe post the numbers you get a gap down then it tends to recover. I think a classic example is NCC where the stock fell from Rs 65 all the way to Rs 51, which was a support. We spoke about Rs 51 last week but to see it sharply bounce back to Rs 63 it’s telling you something that the market is now probably looking beyond this quarter’s results and are looking forward.
I think one thing has been established in this entire one-and-a-half month move is that the midcap space is the future, at least for the next one to one-and-a-half years. So although the numbers are quite poor on the midcap front, I think the market is saying that every dip will be used as a buying opportunity in midcaps. So I guess that’s the takeaway to keep buying.
I still believe largecap is not the way to go. Yes, for the index to move up, the largecaps need to move up. But if you look at what happened last year, when the index fell from about 21,000 up to 15,000, it didn’t correct all the way to 8,000 which was 2008 lows. But all the midcaps and smallcaps were already at 2008 lows so even if you look at that, they have a long way to catch up to the largecap. That’s why I feel that the midcaps will probably outperform in the next one to one-and-a-half years.
Article source: http://www.moneycontrol.com/news/technicals/nifty-may-head-to-5650-5700-if-breaks-above-5460-manghnani_668151.html
