Nifty Can Fall to 7,800 Levels, says Anil Manghnani

Sensex consecutively fell for the second straight day and the 50-share Nifty slipped below its crucial psychological level of 8,150 on the back of broad-based selling.

In the last two trading sessions, the Sensex plunged over 1,100 points after the market participants interpreted from the Reserve Bank of India's commentary that going ahead chances of another rate cut in the current calendar year remain bleak as monsoon uncertainty poses upside risk to inflation. The RBI also slashed its growth forecast for FY16 to 7.6 per cent from 7.8 per cent earlier.

Expectations of weak monsoon rains weighed upon the investor sentiment. India's weather department has said that monsoon rains are likely to be 88 per cent of the long period average compared to its earlier projection of 93 per cent. Weak monsoon rains would mean that the agriculture produce will be lesser which would lead to spike in inflation.

Meanwhile, Anil Manghnani of Modern Shares and Stock brokers says that the Nifty can fall to 7,800 levels in the worst case scenario. 

The market is currently looking like a 'sell on rally' type. In the worst case scenario, the Nifty can fall to 7,800 levels, Mr Manghnani said.

However, he hopes that the Nifty to settle around current levels of 8,100-8,150.

Mr Manghnani said, "I am concerned with the overall selloff. The whole process of Nifty breaking below its 50 week exponential moving average (EMA) started 5-6 weeks ago. Ideally, I would want to keep hope that the selloff in Nifty settles down near the current levels."

Mr Manghnani said that going ahead, for Nifty to start moving higher it needs to remain in a sideways movement rather than going in for large up moves.

"I had earlier mentioned that the fast upward moves do not really help the markets but it creates a buffer for the next fall. I am not really surprised with the move back to 50-week EMA," said Mr Manghnani.

"Sideways movement for some time will allow the markets to regroup. Today's selloff indicates that there is panic where stocks are down 20-30 per cent and these stocks such as Unitech did not even move higher in the past," Mr Manghnani adds.