The Nifty seems to be moving in a range for the past 3-4 weeks and has been consistently facing selling pressure near its 200-Days Moving Average (DMA) placed at 10900 levels, but with most of the negatives in the probability of a breakout is higher, Gautam Shah, Founder of Goldilocks Premium Research said in ‘The Market Podcast’ with Moneycontrol.
Theoretically, whenever a stock or index levels move or trades above the 200-DMA – it suggests that it is in a long term uptrend. “I am not surprised that the market has found resistance near 10800-10850 but at the same time technicals suggest that market does not want to correct beyond a point,” says Shah.
He further added that the index is getting strength from different sectors which is positive. The range in which the Nifty is moving is 10400-10850 is the range, and a breakout or a breakdown will decide the next 500-point move on the Nifty.
“The good part is that with most of the negatives in the price, the economy is opening up, there are hopes of a vaccine, the global market is looking up and the dollar index has started to correct suggest that chances of a breakout is much higher, and if that happens we could well move in the 11000 territoriy,” explains Shah.
Commenting on the sectors, Shah is positive on Midcap IT as compared to largecaps IT stocks. He further added that IT stock performance is likely to continue for many weeks and many months.
“The bigger opportunity over the next 6-12 months will be in Midcap IT. That is one pocket that has seen a nice foundation over the last 6 months. I believe that over the next six months it could be the ‘Dark Horse'. So stocks like Tata Elxsi, Hexaware, NIIT Tech, MindTree could offer 20-50% upside over the next 6-12 months,” Shah added.
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