Indian Financial Markets: Nifty may see a fresh breakout above 5370: Anil Manghnani

Wed, Aug 08, 2012 at 09:37

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Nifty may see a fresh breakout above 5370: Anil ManghnaniAnil Manghnani, Modern Shares & Stock Brokers says, the Nifty has crossed the first important level at 5,300. "Now, a very important trend line is coming up at 5,370. If that gets taken out then it will be a fresh breakout," he adds. . Share . Email . Print . A+A- Anil Manghnani, Analyst, Modern Shares & Stock Brokers

Anil Manghnani, Analyst, Modern Shares & Stock Brokers

The Nifty has been on a strong wicket over the last couple of days. In an interview to CNBC-TV18, Anil Manghnani, Modern Shares & Stock Brokers says, the Nifty has crossed the first important level at 5,300. "Now, a very important trend line is coming up at 5,370. If that gets taken out then it will be a fresh breakout," he adds.

Also read: Nifty may go to 5600, if global momentum continues, says Udayan

Below is the edited transcript of his interview with Udayan Mukherjee and Sonia Shenoy.

Q: What is your view on the Nifty?

A: It has crossed the first important level at 5,300. We had a gap down couple of weeks back. That has been filled up. Now, a very important trend line is coming up at 5,370. If you connect the 6,300 top to the 5,630 top of January-February, it comes exactly at 5,370. So, if that gets taken out then it will be a sort of fresh breakout because that will be like a two-year trendline being taken out. So, it will be very significant, if we can close above 5,370 because that means a fresh breakout.

The one disappointment is lack of momentum. When I mean momentum, I mean participation across the board. If you compare 5,348 about a month back and if you look at midcap and smallcap stocks, they have still not completely recovered from the damage that happened on the last three days of July expiry where a lot of these midcaps fell 20-25% at a time. So, the midcap index is also reflecting the same, it’s about 3-4% lower than what it was last month at 5,348. So, maybe momentum and participation is not there. But if it closes above 5,370 you, will have to consider it as a fresh breakout on the Nifty.

Q: A very interesting stock that you have picked from the broader market is PVR, could you tell us about that?

A: It is an odd one. But I am hoping that if the market does close above 5,370 then even midcaps and momentum should start to pick up again. Although it is an illiquid stock, four-five days back it made a major move with huge breakouts in volumes. It has gone a little sideways. But whoever bought that four-five days ago will come back. So, Rs 169-170 could be a stop and a move back to Rs 195-203 is possible.

Q: What is your gut feeling is the Nifty going to cross over into a fresh breakout or do you think it might falter at this crucial juncture?

A: I hope it does, but the one thing that worries me is momentum. The pace at which it has bounced back form 5,050 levels has caught a lot of people on the back foot. When we were closing expiry in July, there was massive selling and it was a lowest point we had been in July. So, a lot of longs were unwinding, there were no shorts in the system. So, a lot of pain was seen on the last three days that it became difficult jus to come back and buy right again on a breakout the next day.

So, many people may have missed out on the rally. That is why the momentum is not picking up. I wouldn’t mind buying above 5,370, but I think I will keep an eye for a false breakout because of the lack of momentum. So, I wouldn’t ignore the 5,370, if it were to breakout. But I will be a little sceptical because of momentum.