Technical analyst Anil Manghnani, Modern Shares & Stock Brokers feels that global cues will be the key in deciding Niftys course ahead. He told CNBC-TV18 that one should now closely watch the movements of dollar index and the euro.
The euro is only had a one day rally and is now trading below 1.2430, which means has negated all the good news of the EU statement. The dollar index also closed at 83 last Thursday.
"If the dollar index starts to close above 83 then that becomes a big problem for equity globally and even commodities. A dollar rally normally leads to a global equity and commodity correction," he added.
Meanwhile, he feels that range of 5,400-5,420 will be a major test for the market. The market still looks good for a buy-on-dips, but that dip needs to come otherwise it starts to get a little stretched on the upside, he suggested.
Below is the edited transcript of Manghnanis interview with CNBC-TV18. Also watch the accompanying video.
Q: We were speaking about the banks earlier, how do you see the bank Nifty move from here because it has now gotten back to a three and a half to four months high, what kind of moves are you expecting there?
A: It is very close to a crucial breakout level. It is close right at a trendline at about 10,650 and the 76% retracement is at about 10,690. If it starts to close above 10,700 actually it is a fresh sort of breakout for the Bank Nifty. That could be one of the key drivers for the market. If the market had to cross the crucial level of 5,400-5,420 then it could be the Bank Nifty that is going to behold the key.
We saw some of the stocks like an ICICI Bank also suggesting a breakout move yesterday. So it will be interesting how that plays out. The key for India now is global cues. Ideally when you have government intervention which I am not a big fan like I have mentioned before, you probably get a 3-4 days short covering rally or short squeeze which you saw across global equity markets and