Nifty 50 Seen At Record High Levels In 6-8 Months; Metal, PSU Stocks To Drive Surge: Gautam Shah
As long as the Nifty is above 23,800, this is a “buy-the-dip” market, according to the market analyst.
A potential bull market could drive the NSE Nifty 50 back to lifetime high levels within the next six to eight months, according to Gautam Shah, founder of Goldilocks Premium Research.
In a conversation with NDTV Profit on Monday, he said that the market is out of the bear phase and many new sectoral stocks are expected to aid the rally in the benchmark index compared to the old favourites.
Among the sectors, Shah pinned hope on metal, PSU and financial services stocks to propel the momentum in Nifty 50.
Shah explained, “Consumption is already very expensive and a lot of the positives for the next few years are already priced in. That's why I'm not betting big on consumption. The economy's recovery is still uncertain. In this leg of the bull market, I believe the new leaders will be metals, PSU and financial services, with old favourites taking a backseat.”
“But, I do believe that in this leg of the bull market, which possibly takes the Nifty back to lifetime highs, which I think is likely sometime in the next six to eight months, there will be new leaders,” Shah added.
Acknowledging Nifty's recent rally of 2,700 points from the low of 21,743 on April 7, Shah predicted the end of the bear phase and a strong momentum ahead.
“We are out of the woods. The six-month bear market was a digestion of the two-year bull market. The momentum looks good, breadth is excellent, and participation is strong, with the Bank Nifty leading. More sectors are bottoming out and joining the rally,” he explained.
According to the ace analyst, as long as the Nifty is above 23,800, this is a “buy-the-dip” market. He further outlined a potential short-term consolidation, but maintained that the medium-term outlook is positive.
“I think in the near term, we are heading for 24,800 and over the medium term. we are heading for 25,600. So all dips are a buy, just be in the right pockets, be in quality stocks and stick to the large gaps,” he advised the investors.
Shah maintained a favourable outlook for the financial sector, noting that it is supported by the RBI's stance and the strong performance of banks, with no major valuation concerns. "So, given all of this, if I have to think medium term, I think there is another 10% upside for the Bank Nifty towards a level of 60,000. There could be some consolidation if it were to lose 2-3%. I think it's very normal, but I do believe the top stocks, the top three names, will do much bigger things going forward,” he said.
For the automobile sector, he acknowledged the recent 25% correction, but said that the rebound looks durable. He said that besides auto, FMCG and IT are also expected to witness a gradual recovery.
"So, I think for both FMCG, auto and IT, the worst is over. All three sectors will gradually come back, and it's sort of an advanced indication that the economy can also get back on track. So far, the earnings season has gone off relatively okay. No major shocks and I think the price action suggests that you're going to see more upside."
