Market setup: Autos, real estate, banks likely to outperform

Indian equity benchmarks rose sharply on Friday amid gains across sectors following two days of losses tracking mixed moves across global markets, though persistent concerns about worsening inflation and receding global growth kept investors cautious.

Today is a day to look at users of commodities, that is one space to look at and autos are an obvious choice. Also fuel, metals, everything is going to help. Real estate is something that one could look at. Banks may outperform if the battle of inflation is going to be there.

However, the problem with this market is that Nifty has been making 300-400 point moves daily. Now, bear market rallies are powerful, like one on Friday. So if this market rally has to extend and that is a big if in that case, the first test would be at the 20-day moving average of 16,510. The Bank Nifty to DMA is also 700 points away at 34,900. So a 20 DMA halt if it happens, will confirm the larger downtrend. But if Nifty crosses it and closes above it, then even the stronger shorts will have to cover.