Reliance one of best stocks to play India story, expect it to test lifetime high soon: Gautam Shah

According to him, telecom and pharma stocks clearly stand out. “The pharmaceutical sector has been in a corrective phase for almost four and a half months now and some focus is going back into pharma, so I do believe that this could possibly be the real turnaround in pharma,” he said.

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The current market correction is within the larger bull market, he said. “I still want to do a buy on dips in the current market environment,” said Shah, who believes the market is "clearly oversold as we get close to supports".

“I am being optimistic because I see some evidence on the screen and on the charts that the market is a little oversold,” he said.

He believes there is no need to be overly worried as the market still has not lost 10 percent from the highs. “This is still normal. This is the kind of shakeout that you needed before the next phase of the bull market can begin, but the price action can end very soon," he said.

"Our working number on the downside on the Nifty is about 16,600-16,700. I expect quality support to come in around those levels and we are just 1-1.5 percent away from that point,” he said. Once those levels get tested, there will be will be a serious attempt to bottom out around 16,600-16,700, and therefore, there may be a time correction that could last for a few weeks, according to Shah.

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He believes the 17,300 mark could now act as a ceiling for market. “I want to believe that there will be a serious attempt to bottom out around 16,600-16,700. If that does not hold because of global factors then we could go down all the way to 16,000 which is my worst case, but I don’t think we are going to get there in a hurry,” he said.

“I have been a big bull on the unlock trade for the last eight months. Stocks have come off as if there is no tomorrow but this is a buying opportunity. Once this newsflow subsides, the unlock trade will come back strongly. So investors should look at this opportunity to get into unlock,” Shah said.

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Shah suggests SBI, ICICI Bank and Kotak Mahindra Bank to those who want to play banks now. “I want to wait to see the market stabilise before I can get into the PSU names but the other three names I mentioned look far more lucrative on the charts,” he said.