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Speaking to CNBC-TV18, Anil Manghnani of Modern Shares & Stock Brokers said that 6,200 on the Nifty and 20,500 on the Sensex have been a little bit of barrier levels. “I think if we can start trading above that on a consistent basis, then the next logical target for both the Sensex and the Nifty would be about 21,200 on the Sensex and about 6,465 on the Nifty,” he said.

His colleague, Neppolian Pillai is optimistic about Oriental Bank of Commerce. “I feel if you can buy this stock anywhere from Rs 305 to roughly about Rs 270, you should get a price back upto around Rs 363-380.

Excerpts from CNBC-TV18’s exclusive interview with Neppolian Pillai & Anil Manghnani:

Q: Banks has been the big flavour last few days, what is your take on the bank index and which bank would you buy at these levels?

Neppolian Pillai: We had maintained that the banking index had come above and had started trading above the breakdown level - for the last four-five months, it never used to cross that. So we had requested a consolidation there and then a kind of a flare up and that is what we are seeing currently. Now the index is likely to continue to perform - from underperformance stage, it became a market performer now; probably it will become an outperformer from hereon.

One of the stocks, which you can look at is Oriental Bank of Commerce. There is a specific reason for selecting this stock. Most of the PSU banks’ stocks are at new all-time highs.

Now this bank with a high of about Rs 365, is still available at about Rs 305-300 levels. Yesterday it broke out of the Rs 97 range. So I feel if you can buy this stock anywhere from Rs 305 to roughly about Rs 270, you should get a price back upto around Rs 363-380. Rs 380 - we are calling for a new all time high and Rs 368 - just below the previous high. So it looks good - with around 20%-30% return from here, that is a stock that you can look within the banking sector.

Q: What is the Nifty suggesting for the month of January?

Anil Manghnani: Pretty much, the action is in the smallcaps and midcaps. 6,200 on the Nifty and 20,500 on the Sensex has been a little bit of a barrier. I think if we can start trading above that on a consistent basis, then the next logical target for both the Sensex and the Nifty would be about 21,200 on the Sensex and about 6,465 on the Nifty. So right above these levels, you have got a good 700-point next move on the Sensex. Hopefully we can start closing above 20,500 from now on.

Q: What about the midcap index, do you think it can continue this stretch of outperformance even as an index versus the Sensex and Nifty?

Manghnani: Yes, I think so. I think we have had a couple of 8%-10% corrections in the last three-four months and every time we thought that maybe now the midcap story would get over, the way it has bounced back on both occasions and outperformed both the major indices and continues to make new highs even before the other two indices have done, it suggests outperformance.

I think this time it is not just operator-speculated-driven, there are a lot of domestic mutual funds buying into midcap stories. If you just look at the FII data, they have not done anything, if you net of November and December. But still, these stocks are moving and you can see some pressure or some profit booking being taken in largecaps; so you should see a net-sell figure. But that is not happening, which would suggest that whatever profit booking is taking place in largecaps, that money is definitely moving into the midcap sector, which would suggest stronger hands and outperformance. Immediate target would be closer to 10,000 and 10,200 on the Nifty midcap index. But I think eventually if it can cross 10,200, we are headed more towards 11,000 on the CNX midcap.

Q: ITC from the heavyweights has been looking stronger than the rest - from hereon can the stocks see higher levels you think technically?

Pillai: Ideally yes, because that is a stock, which is at again a new all time high; the previous stop has been Rs 212. Beyond that, it flared right upto around Rs 227 yesterday and it is cooling off a little bit now. But I think anywhere from Rs 220 to roughly about Rs 205, if you take that broad Rs 15 range, I think this stock is going to just drop and then again go back and hit probably a new high. You can look for a target of around Rs 256 and also to say on the FMCG index, it has been hitting new lows continuously. Now this month, it is slightly coming out of that underperformance stage majorly because of ITC. So I think that stock after a brief resting period is going to go and hit a target of around 256. One can go ahead and buy in this range.

Q: You see further gains in the month of January for Apollo Tyres?

Pillai: Apollo Tyres has already gained from around Rs 40-45 levels where it consolidated; it is about Rs 62. But the momentum is so huge in that stock I think further upside seems imminent - it is around Rs 62 now. Around Rs 62 to Rs 52, take around Rs 10 range - that is about 15% range for you. If you can accumulate that stock, I think it is going to go and hit a target of roughly about Rs 78 on the upside. Keep a stop loss of around Rs 50; that stock should do well, momentum is there - so it should gain in the month of January also.

Q: What are your thoughts on capital goods now because you guys seem to be picking Bharat Electronics as a hot one for January?

Manghnani: If you look at capital goods - it is still an outperformer as far as the Index is concerned and would remain for some time. But the early signs of fatigue are there. If you compare, every time the index corrects; first we hit 18,182 and the last time we hit 18,086, but when the market did that at 18,086, it was still low higher than 18,182.

But stocks like BHEL, Larsen or ABB - they have gone and hit newer lows, which is clearly suggesting that although this has been an outperformer and will still perform, it is slowly losing its shine and we tried to stay away from the top three or four.

You cannot probably consider BEL a midcap, but it is still in that category. I think you can accumulate that stock - it is starting to make new highs after long time – Rs 2,125 to about Rs 2,015 could be the accumulation zone and then the upper target would be around Rs 2,245 to about Rs 2,540.

Q: The other rate sensitive space that’s begun to move is real estate. You see more strength for Unitech, beyond its 52-week high?

Neppolian Pillai: Yes, I guess so. I mean the sector broke out about two-three months back - in a breakout sector it always makes sense to buy stocks, which are making new highs because when the momentum is there with you, the volume is there with you to get out even if you get stuck. But then the way the Unitech stock is placed it’s around Rs 520 I guess today, so Rs 520 to around Rs 460 - it could drop about Rs 30-40 on the downside. But then the upside is right upto around Rs 620-720; it’s one of the leading stock of the sector. If the sector has to perform, this stock has to perform. So I find this stock could further gain from here - go in and invest on the fall on this stock, no problem.

Q: Just to get back to the Nifty for a bit. Does it look like the Index has convincingly broken the range it was in? Is 6,000 is the base for the Nifty now, or is it lower?

Anil Manghnani: I still say it’s lower - right upto 5,700, I think would be the base - 19,000 probably on the Sensex and about 5,700 on the Nifty would be key levels now going forward. As long as every time there is a correction and the market doesn’t break these two levels, you can buy into every fall because of the monthly charts. Sure, the daily and weekly charts are not suggesting anything great and the question arises for how long could you outperform the world markets - there is a theory that as and when world markets correct, money will flow out of the US into emerging markets like India. But for how long, that’s a million dollar question. I think maybe since we have always had a pre-budget rally, we are okay for the time being. But anytime there is a correction, if the global markets to get severely downside - suppose the Dow starts breaking 12.5,000 and we do get a correction, any fall upto 5,700 and 19,000 can be bought - anything below that, then you need to be a little more careful.

Q: A quick word on the pharmaceutical Index for January and your pick there, Dabur Pharma?

Neppolian Pillai: Almost after a two-years downfall underperformance, the sector seems just about to breakout. In that kind of a scenario, it’s better to be again with the momentum stock, which is broken out - it’s at a new all-time high. It’s around Rs 92 Dabur Pharma today. The reason for picking up is that the sector is not performing just trying to breakout; this stock is at a new all-time high. So if you buy again in a range from Rs 90-80, you should get upward target or roughly about Rs 112-113. So that’s about around a 20-25% return; that’s the reason for picking up Dabur Pharma. It’s a midcap pharma, but still it will do well within the sector.


SECTORAL INDICES

BSE Target Support

Auto 5991-6299 5368-5557

Healthcare 4493-5225 4020-4182

IT 4571-4637 4199-4365

Metal 20640-20787 18743-19323

Oil 14090-14258 12107-12613

FMCG 2481-2610 2137-2237

Cap Goods 20032-21010 17490-18689

Banking 11898-12661 10591-11063

Realty 13629-14816 12082-12469


APOLLO TYRES
Modern Shares View
-Buy at Rs 52-62
-Target Rs 78, stop loss Rs 50

ORIENTAL BANK
Modern Shares View
-Buy at Rs 270-305
-Target Rs 360-380, stop loss Rs 265

ITC
Modern Shares View
-Buy at Rs 205-222
-Target Rs 256, stop loss Rs 203

DABUR PHARMA
Modern Shares View
-Buy at Rs 79-89
-Target Rs 102-119, stop loss Rs 76

ISPAT IND
Modern Shares View
-Buy at Rs 68-79
-Target Rs 94, stop loss Rs 65

BPCL
Modern Shares View
-Buy at Rs 485-515
-Target Rs 574-610, stop loss 480

UNITECH
Modern Shares View
- Buy at Rs 460-540
-Target Rs 620-720, stop loss Rs 455


Disclosures:
Neppolian Pillai:

I have holdings only in BPCL

Anil Manghnani:
It is safe to assume that my clients & I may have an investment interest in the sectors discussed.

Source: Moneycontrol.com