Nifty 50 May Hit 18,400 By August-End, Says Goldilocks Premium's Gautam Shah

It is not about being "top-down" anymore, instead it is about being "bottom-up", according to Shah.

<div class="paragraphs"><p>NSE Building In Bandra Kurla Complex, Mumbai, India. (Photo: BQ Prime)</p></div>
NSE Building In Bandra Kurla Complex, Mumbai, India. (Photo: BQ Prime)

India's benchmark stock index Nifty 50 may rally to 18,400 by August-end on improving macro events, according to technical analyst Gautam Shah.

“People are concerned that we've run up a lot and there is room for some correction,” Shah, founder and chief strategist at Goldilocks Premium Research told BQ Prime’s Niraj Shah. “But when you get such wonderful global cues from U.S. markets and European markets, India cannot get into a corrective phase on a stand-alone basis."

The 50-share index may pullback by 300-500 points from the current levels, Shah said. However, investors and position traders should continue to stay invested, he said. The Nifty 50 has closed at 17,825.25 on Aug. 16.

“I think 17,400 and 17,100 are now solid support for the rest of August," he said, "if everything goes as per plan 18,400 and beyond is definitely coming."

The tech-heavy Nasdaq and S&P500 have been rallying in the last four weeks on better than expected earnings and upbeat economic data. Oil, too, pared losses on increased expectations from Iran nuclear deal.

There is convergence of multiple technical studies at 17,750, he said. Hence, if the market does close above the 17,750 mark in the next few trading sessions, he said, it would suggest that the market is "opening up further upside."

Key Themes

It is not about being "top-down" anymore, according to Shah, but it is about being "bottom-up".

There are some great opportunities outside the 50 stock of the index, he said. The "real bull market" is actually playing in some of the sectors, in the mid caps and small caps, Shah said.

"The top 50 might not give you stellar returns, but outside of that, we are definitely in a bull market."

Capital goods, autos, and FMCG are his top recommendations on sectors that may outperform. Apart from these, he also bet on real estate.

Meanwhile, IT and Pharmaceutical stocks are a "contrarian bets."

The public sector enterprise index could appreciate 25 to 30%, according to Shah.

He described PSE as the "dark horse" of the current market scenario. Bharat Electronics Ltd., Coal India Ltd., NTPC Ltd., Power Grid Corporation of India Ltd. were some of the well-performing names in the past couple of weeks, according to him.

Stocks belonging to the direct-to-consumer space to move upside, he said, as during the pandemic, stocks in this industry were the most stricken.

Indian Hotels Co., Delta Corp Ltd., Nesco Ltd., quick services restaurants, he said will be doing well. Multiplexes and INOX Leisure Ltd. are very sensitive to changes as they are the first to be impact in any situation. Thus, they didn't make it to his list of recommended stocks.

Stick to the top quality stocks in each of the discussed sectors and the rest market will take care, he said.

Watch the full interview here: