Buy The Dip As Markets Build Foundation, Says Gautam Shah Of Goldilocks

The Indian market have a lot more upside, and in the past year, it has just created a foundation, according to Gautam Shah.

Last November, the market was at 18,500, and this November, it is at 18,600; it hasn't not done anything special, Shah, founder and chief strategist of Goldilocks Premium Research, told BQ Prime's Niraj Shah.

"This is the most unique lifetime high I have seen in the last 20 years, and the reason I say this is because there is no euphoria, portfolios are underperforming, and people are complaining about the all-time highs," he said. "If you look at the breadth statistics, only 50% of the stocks on the NSE 500 are trading above the 50-day moving average, and the daily RSI of the Nifty is still below 70."

"We have seen poster boys for 2021 that have not done well," he said. "Look at Laurus Labs; the stock is at a 52-week low, but the indices are at an all-time high."

This is a unique market, according to Shah. "We are in a high beta space; I see the Nifty moving to 18,950, which is my near-term target, and thereafter 19,400," Shah said.

According to Shah, investors will see dips from time to time but should stay invested and use all the dips as buying opportunities.

Shah said banks have been a catalyst for the last couple of months, and this is probably the reason for the Nifty to touch an all-time high. "Whenever the banks do well, Nifty's texture, look, and feel are different," he said.

There is a lot more upside in the Bank Nifty charts as it's a mature rally, according to Shah. Not only are the usual poster boy Bank Nifty stocks such as the State Bank of India, ICICI Bank Ltd., and Axis Bank Ltd. doing well, IndusInd Bank Ltd. and HDFC Bank Ltd. have performed smartly in the last few months, he said.

“We are looking at a bank Nifty target of about 46,500... just about 10% away from where we are."

Shah is confident about the long-term monthly chart of HDFC, which shows a very small downside and a huge upside. "HDFC in private banking and SBI in PSUs are my best bets," he said.

Shah is also betting on the real estate index. “We saw in 2021 that when real estate does better, everything around it does better."

“My favourite is still Ambuja Cement, and the charts are also very solid,” Shah said, adding that can be the big winner in the next 12 months, followed by UltraTech Cement Ltd.

The capital goods and infrastructure sectors' charts are very good. The NSE infrastructure index is already at an all-time high, according to Shah.

“If anyone wants to get mid- and small-cap returns in large-cap, stick to capital goods and infrastructure," Shah said. “Larsen and Toubro, Siemens, ABB, and Cummins India are clearly my top four."

India is on a strong uptrend and that is not going to get derailed, even though "we might see a correction from time to time", according to Shah. The second week of January is usually the time when markets can get a little tentative, but from now until the next five weeks, things look okay, Shah said.