Gautam Shah, Founder and Chief Strategist, Goldilocks Premium Research believes it is not going to be easy for the Nifty to break the 21,850-22,250 range in the near term given the limited participation from some heavyweights.
“In December, IT, Reliance Industries (RIL) and banks did well and that is probably the reason the Nifty gradually moved to levels of 22,000 and beyond. For the last month, it is just the burden on RIL to keep this market safe. Banks have come off in the last 15 days and HDFC does not outperform. The move on the IT index in the last week has been discouraging,” he said.
Shah expects the pharma and metals spaces to be outperformers in the next three to six months.
He sees a 20% move in the metals index over the next six to twelve months and within the metal space two public sector units (PSUs)--NALCO and SAIL--stand out.
“Both these stocks have the potential to register supernormal gains this year,” he said.
In the pharma sector, he expects a 15% move on the pharma index from here. Sun Pharma remains his top pick. Cipla, Dr Reddy’s Laboratories, and Zydus Lifesciences all have great charts and will continue to outperform, he mentioned.
Discussing IT stocks, he mentioned that he has been a bull on the IT space for the last six months. Tata Consultancy Services (TCS), and HCLTech remain on top of his list.
However, he is concerned about the big debate around artificial intelligence (AI) and whether it is going to disrupt the IT space in general and the Indian IT services space.
“Apart from the top two three names, I want to stay away from the IT space till things stabilise,” he said.
He also discussed a couple of commodity bets.
Nymex crude, he said, is gradually moving towards the level of $90-95 per barrel given what it has done in the last one to one and a half months.
“There are some near-term risks but it is a battle between short-term and long-term. Short-term there are concerns, medium-term and long-term this is a great opportunity to do your homework and pick quality stocks to play the next wave up,” he explained.
He expects the chemical index to see a breakout on the upside and stocks like Aarti Industries, and SRF could be potential beneficiaries.
For more, watch the accompanying video
(Edited by : Shweta Mungre)
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