Gautam Shah of JM Financial is still optimistic about the market in this consolidation phase. He is very optimistic on auto sector, while wishes to stay away from IT and pharma.
Even as the market wades through a consolidation phase with the Nifty breaching 9600-mark on a few occasions, some experts see no reason to worry.
In fact, players like JM Financial believe that such dull days are great in a bull market. “They help the market in several ways. In a technical sense, it helps the market get over the overbought tag as the trading environment is quite relaxed,” Gautam Shah, Associate Director & Technical Analyst, JM Financial told CNBC-TV18 in an interview. This, environment, he said, is an indication of buying climax being far away.
Terming this bull market strong and pure, Shah expects the sideways correction to end in a couple of days. “The foundation is laid for the Nifty to test 10K level,” he said. At 9600, risk reward is in favour to go long, he added.
Within the market, he sees banks to continue to perform well. Banks have been the lifeline, he said, adding that banks were behaving responsibly despite elevated levels. “The foundation has been laid for Nifty PSU banking index to hit 4000, while the Bank Nifty’s 25,000 target remains intact,” he added.
Shah continues to recommend investors to stay away from IT and pharma. “You don’t want to get into a sector which is not in synchrony with the market,” he added.
Meanwhile, he is optimistic on the auto sector. It has been the best performing sector in the past one month, he said.Among midcaps, he suggests investors to be very choosy while investing. At such levels, knee-jerk reactions could hit the midcap index a lot. Having said that, he sees no reason to get out of this sector. If one wants to trade in this, large caps offer greater value, he said.