Nifty Set For 'Final Hurdle' Before Reclaiming 25,200, Says Goldilocks' Gautam Shah
Banks are likely to lead the market rally in the next three to six months, according to Shah.
The Indian stock market has shown resilience, rallying 1,200 points from its recent low, and is now poised for further gains, according to Goldilocks Premium's Gautam Shah.
The recent lows marked a crucial bottom for the Nifty, despite lingering debates, the founder and chief strategist at Goldilocks Premium Research told NDTV Profit on Thursday. “The screen has looked really vibrant in the last week. Participation is excellent, momentum is back, and sentiment is much better,” he said.
Geopolitical tensions and economic slowdown had overshadowed the influence of domestic money, he said. “The charts are very well placed, and I believe we’ve made a bottom. More sectors are starting to perform well, with mid and small-cap stocks making an impressive comeback,” he explained.
The markets have struggled in recent sessions at the 24,500 level, a key resistance point, Shah said. “Once this final hurdle is cleared, the Nifty could add another 500–700 points, reaching 25,200,” he said.
While the medium-term outlook remains positive, Shah cautioned against expecting new highs immediately. He described the current market battle as a tug-of-war between domestic liquidity and economic challenges. “This will keep markets range-bound for several months. However, the bias and trajectory are clearly upward,” he noted.
Banks are likely to lead the market rally in the next three to six months, Shah said. He pointed out the banking sector's resilience during challenging times, particularly the Bank Nifty, which held steady for six weeks, while the broader Nifty corrected by about 10%. “This underperformance of many years might be coming to an end. The Bank Nifty is moving towards 55,000 and could reach 60,000 in the next 12 months,” he projected.
Among the banking names counter, HDFC Bank Ltd. and State Bank of India could see growth ahead, he said. HDFC Bank could move toward Rs 2,200 per share in three to six months, and SBI is setting up for a bigger trade, he stated. Investors should focus on industry leaders over the broader players.
Watch The Conversation Here
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Here Are The Excerpts
Let’s start with where you see the indices going, and are you seeing any strength really coming in especially, I mean, what do you think we're ending the 2024 calendar year on the Nifty?
Gautam Shah: I think we've rallied 1,200 points from the recent low, and we are still debating whether we've made a low or not, for the right reason. But I do believe that the screen has looked really vibrant in the last one week. Participation is excellent. Momentum is back. Sentiment is much better.
When we spoke to people on the street last week, when we were close to 23,300 clearly, you know, talks about slowdown and all those geopolitical factors were at play, and nobody gave importance to domestic money. But I think this value of 1,200 points, again, you want to put domestic money responsible for it. I think the charts are very well placed. I do believe that we made a bottom at the recent low and more and more sectors are starting to do well.
As I said, mid cap, small caps, the way they've come back in the last one week is pretty good. We knew that there would be a hurdle around 24 500 and you would see, in the last couple of days, including today, you are seeing the market find some resistance at this final hurdle of 24 500 and once this is taken out, I think you are ready for a 500 to 700-point move towards 25 200.
But if you talk about the medium term, is it a case where the markets will start doing well once again, and start making new highs in a hurry? The answer is no, because I think the battle is still between domestic money and the economic issues that we are facing right now in terms of slowdown and earnings. So that will probably keep the market contained in a sort of a cage or a range for many months to come. But the bias and the trajectory is clearly up, and with what Banks have done in the last one week, I'm very encouraged to believe that they will be the leader for the next three to six months.
So you're buying Bank Nifty at these levels? It's Samina joining in, and also the couple of banks that we've talked about for the last couple of months has been you know, your HDFCs and ICICI Banks of the world, including SBI, which may not have moved as much, but your trade on Bank Nifty and your trade on your top banking picks for the December series?
Gautam Shah: See, I do believe how sectors handle difficult times is an indication of what they will do in the good times. I think for about six weeks, you had the Bank Nifty stay in a range while the Nifty corrected about 10%. So on the ratio charts which we track as technical analysts, I think it was upward sloping. I think this underperformance of many years could now be coming to an end. Maybe it could do with what the RBI might do over the next couple of months. I think that could be something that could be getting priced in at this point of time. So I do believe that the Bank Nifty is moving towards 55,000 and it is likely to make new highs well before the Nifty, something that we are not used to.
So that's one big takeaway and if you're talking 12 months, I think the bigger target for the Bank Nifty from here could be about 60,000. So looking at a decent 7,000-8000 points move on the Bank Nifty, if somebody takes a 12-month view. If this has to happen, the top boys will have to do well, HDFC Bank has been a favourite every time we have interacted, we've spoken about it. The stock is trading at lifetime highs, which I'm sure makes a lot of people happy, but I think this is just the beginning of a much bigger trend, and I do see HDFC Bank moving towards 2,000-2,200 maybe plus, plus over a period of three to six months.
The dark horse and our favourite is clearly SBI. I think valuations, technicals, charts, you look at anything SBI, I think is setting up for 1,000-plus again. So I'm really looking at only these two names. I'm not going lower down, because I think this is not a market where you can be into grade B and grade C.
Is that true for just banks or some of the other favourite themes as well, that you would stick to Grade A and not go to Grade B and Grade C?
Gautam Shah: Yes, I think that's a very good point Niraj and I think our stance has been that anything that you do in the markets now, let it be Grade A. You know, in the last three years, you bought anything and everything, and it did well. It got justified on Excel sheets and on paper. But I think now we've come to a point where valuations have reached a point that you can't just buy anything and everything.
I mean, a great example is where Indusind Bank is today, and where HDFC Bank is today and you are seeing many such divergent cases in each of the sectors. So stick to the Big Boys. I think you still have earnings to deal with in January, which I think is going to be a big challenge. So I think the concept of winner takes it all, I think is going to be at play over the next three to six months. So please stay with the industry leader and challenger, and I think you will grossly outperform the market.
Would the same apply for IT as well? The Nifty IT has been a positive surprise for the last week or so, continues to be today as well. Would it be the same outlook, stick to Grade A?
Gautam Shah: I think so. But even mid-cap IT has done quite well in the recent past. I think two of our favourites have been Mastic and E club and even a Persistent Systems.... But you know, post the U.S Presidential elections, it just seems as if, you know I.T. has got to spring up and I think since then, it's just been one way up for this entire pack. Even from here, I see a 10-12% move on the I.T. Index, led by TCS, which can gradually move to a level of 5,000.
Now that will be an event in itself, if it were to play out. So if Banks are in a good place, if I.T. is in a good place, and Reliance is non-existent in some sense, then I think the market is safe. You don't need to make new highs if you are ranged and if you trade with the positive bias, I think smart guys will make enough money out of that.
Good point. Gautam, and I know you said, let's stick with Grade A, and that's the same argument where investors have been advised for over a year now to find value in a large-cap place because the risk reward there was far more favourable. But at any sort of uptick, it's the broader market that starts outperforming, and that is something that's worth taking note of in some ways. You talked about I.T., you've talked about Banks. Let's talk Metals now. Historically, December usually has been a good month for Metals. I know it may not be fair to look at a sector from a one-month time horizon, but let's extend back to maybe one quarter or two quarters. Would you consider a long trade on Metals and if yes, which is your top pick?
Gautam Shah: Metals, I think, is the dark horse sector of the next one year, and I do see many of these stocks delivering anywhere between 20% and 40% over the next 12 to 18 months. Now, you might not have a fundamental thesis, and you know, to whatever I speak to people on the ground and the way we look at the charts, we do believe that it's at the cusp of something really big. If you look at the two-year chart, you'll notice that Metals did exceedingly well for a period of one and a half years and in the last six months, it got into a range, 8,600 on the downside, 10,400 on the upside.
Now it seems that consolidation has come to an end. The news flow that's come out of China in the last three weeks has been a lot more supportive and, you know, the management talk has also been quite positive. Since we crack a lot of Commodity charts, we feel that that inter relationship will also work well. So I do believe that the Metals Index itself can appreciate about 20% from here. So it could be one of the top performers, if you take a December to probably next December, and all the top stocks, you know, led by a JSW Steel, a Vedanta, Hindalco, Nalco, which has been a favourite, and even a Tata Steel, which seems to be languishing at 140. I think the risk reward is very lucrative to be making investment positions here.
I want to ask you about Chemicals and CDMO, but just very quickly. I mean precious Metals out there too. I mean, you've been a big believer in Gold. Gold continues?
Gautam Shah: Yes, Gold and Silver is a structural story. I think no matter what, I think Silver has tested a level of 35, seen a bit of a cool off. I do believe that Silver will gradually move to a level of 41, so anywhere around 2,930 I think it can be invested into even now.
Gold I think, remains a great story. It's taken a bit of a pause. Maybe after the U.S elections, people feel that the world is going to be slightly more comfortable and relaxed, it could be, and we all want that. But anyway, I think Gold is going to be a trade that is likely to move towards 3,200, if the view is 12 to 18 months.
Now, like I said, one would really know, the last two, three years, Chemicals have been on the sidelines. We hear stories of de-stocking, etc, starting to come about, and therefore, maybe possibly that 2025, could be a good year for Chemicals. I would love to know if charts indicate anything like that?
Gautam Shah: Okay, first things first. In bull markets, you don't work hard. I think Chemicals has been a very complex basket. You know, it's had a lot of top starts multiple times. It tries to do well, it tries to get into a trend, and then just falters and comes off. In fact, as we speak today, there are many Chemical stocks which are near 52-week lows and very few names which are near 52-week highs.
So I think it's a very complex trend. There is no real clarity that they will come back. There are few standalone names that we like, for example, a PI Industries or a Thirumalai Chemicals, you know, which we have backed in the last three to six months. But if I look at it as a sector as a whole, I don't think there is any great opportunity based on today's data. If things improve over the next three to six months, I will look at it, but I don't want to go that route.
But the other sector, which I like, and we've been pushing it for the last few months, is real estate. I think some of the top stocks there, whether it's DLF or Microtech or Oberoi Realty, have wonderful charts, great stories and I think smart money is chasing it. Fundamentals are right up there. I think it could be one of the bigger winners, along with Metals over the next six to 12 months.
Gautam, just wondering if you're buying into this excitement on Platform Companies, all the new rage, or are you sticking to the Banks, I.T., Metal, you know, the safe and sound?
Gautam Shah: If I have to just, you know, broaden it a little more. The New Age is here to stay. I think it's changing our lives. AI is changing our lives, no doubt about that. Therefore, some of these new-age companies, whether it's a Zomato, which we've liked for a couple of years now, whether it's a Nazara, a Car Trade, which I think is a great model, Aaffle India, a stock that we covered recently, and we believe it can do big things, and it's a great proxy to play AI in India.
So some of these stocks we like, but then you need to be careful. You know, you can't think three years into five years, because the world is getting disrupted every three months. So keep a watch like Zomato has been a 50 to a 300 but then, you know, the story is played out beautifully. So keep a watch on earnings and the New Age is something that you cannot ignore, for sure.
Your top pick here?
Gautam Shah: You mean, in the New Age space?
Yes.
Gautam Shah: I would still go with Car Trade. I think this is a company that's really disrupting the industry. It's, I mean, we've been backing it from levels of 700 it's already at 12-1300 today, and I think it can go on to do much, much bigger things over the next two to three years.
