"At levels of 10,600 the market had turned oversold, not just on the charts but also from a sentiment perspective with the news flow not supporting the equity markets," Gautam Shah said.
The auto index is likely to see a 1,000-point recovery, said Gautam Shah, director and chief technical analyst at JM Financial, adding that if the sector rebounds, it will be a good sentiment booster.
According to Shah, many other sectoral indices and not just auto are likely to recover further.
"Not just auto, but many of the sectoral indices are trading right at medium-term support and that gives me the confidence that maybe this market has some more recovery before it goes down once again," he said in an interview with CNBC-TV18.
Shah also expects a 1,000-point recovery in the midcap index and said this is a great time to buy midcaps.
The market has gone through a lot of pain in the last few weeks, he acknowledged.
“At levels of 10,600 the market had turned oversold, not just on the charts but also from a sentiment perspective with the news flow not supporting the equity markets and the kind of rebound that we have seen from those levels suggests that bearish momentum has been arrested for the time being,” Shah said.
On Nifty levels, Shah added, "If the Nifty does get past 11,150, it will open up a rally towards 11,300 ideally and possibly a rally towards 11,450 best case."
“However, this rebound that we have seen, looks temporary in nature. I think the market is now going to buy time, it is likely to get into a large range. It is unlikely to see major upside or downside, which is not a bad thing at all, but at the same time let me also highlight that a large part of the market could have bottomed out,” he further said.
On the global market front, he said, “I continue to be extremely bearish on the US and the European markets and if those markets were to get into a major downtrend, which is my view, I do not think India is going to be insulated."Source: CNBC-TV18Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.