homemarket NewsThe worst performing sectoral index this year is trying to bottom out, according to this chartist
The worst performing sectoral index this year is trying to bottom out, according to this chartist
Gautam Shah expects that while the Nifty may spend time in a broad range, the Nifty Bank still has more downside to cover.
Gautam Shah of Goldilocks Research believes that the Nifty IT index is attempting to bottom out. "The fact that levels of 26,500 have held out in such a difficult environment, gives me some positive vibes that this index is trying to bottom out," he told CNBC TV-18 in an interview.
The Nifty IT index is the worst sectoral performer this year, down 30 percent. This is the index's worst annual performance since the global financial crisis and its first annual drop in six years. All constituents of the index are down anywhere between 20-45 percent.
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Shah adds that while there is no clarity on the charts for the short term, but these may be good levels to buy IT for those investors who are seeking value for the long term.
Indian equities are currently in correction mode after testing all-time highs earlier this month. The Nifty is down over 1,000 points after the index scaled the 18,000 mark for the first time in over a year.
Shah does not see a significant upside for the index as levels of 17,200 and 17,500 will act as key resistances. He expects a fall towards 16,800 and eventually 16,500 on the Nifty if the index closes below the 17,000 mark.
"The market has just lost leadership — Banking, IT, there is nothing that can propel this market higher," he said.
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It was the Nifty Bank index that led the outperformance from the lows of June. The index gained nearly 10,000 points from the lows of 32,500 to scale a new all-time high of 41,840.
Shah believes that the scope for the Bank Nifty to fall further is higher as the rally was equally big in quantum. He finds most of the banking charts to be overbought or negative and expects the index to fall towards levels of 37,900 and lower. The index has corrected over 3,200 points from its all-time high.
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(Edited by : Ajay Vaishnav)
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