Gautam Shah expects the Nifty to reach 23,500-24,000 soon. He said, “There is no case for Indian markets to fall further.” While the broader market might stay slow, he sees many opportunities in IT, PSUs, and FMCG stocks. Investors should focus on value and pick specific stocks to generate good returns.
Gautam Shah sees 23,500-24,000 on Nifty; flags IT, PSUs and FMCG opportunities
Gautam Shah, Founder of Goldilocks Global Research, expects a near-term Nifty recovery and sees opportunities in PSUs, IT, FMCG, energy and select metal stocks.
Indian equities could see a near-term recovery after the recent sell-off, but investors should not expect the broader market to enter a strong uptrend immediately, according to Gautam Shah, Founder of Goldilocks Global Research.
Shah believes the recent decline has pushed valuations and technical indicators to more comfortable levels. He expects the Nifty to find support around the 22,000-22,500 zone and sees a possible recovery towards 23,500, with 24,000 as the best-case scenario.
He added, “I would be constructive on the market from current levels, but still the opportunity is not in the largecaps and the Nifty, where I think the underperformance on an overall basis will continue. A stock-specific strength is likely to stay. I wouldn't be too bearish here. I wouldn't be negative. There is no case for Indian markets to fall further.”
Financials and IT among preferred sectors
Shah expects financial stocks to make a comeback, pointing to the relatively resilient performance of the sector's underlying businesses. He believes some leading financial names could help support the market during a recovery.
Technology is another sector where he remains positive. He believes the worst may be over for the technology space and expects both largecap and midcap IT stocks to participate in a recovery.
Shah sees technology as a particularly attractive theme at current levels, with the sector potentially moving higher as market conditions stabilise.
He added, “I still believe that this is a very stock pickers market. It's a very bottom-up kind of a market where you have to be in the microcaps and smallcaps to generate alpha. That's the only basket which is actually doing well. Even in that basket, specific stocks and specific themes so that's really my working view that don't focus on the top 200 nothing special is going to happen there.”
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PSUs, FMCG and metals offer opportunities
The market expert believes investors should focus on value rather than stocks trading at expensive valuations. He sees potential in select public sector undertakings (PSUs), FMCG companies and metal stocks.
"Do not buy anything that is richly valued in India anymore," Shah said, highlighting valuation as a key factor for investors.
Within FMCG, Shah sees signs of a bottom forming after the sector's prolonged underperformance. He expects a recovery in consumption to support select FMCG stocks, particularly companies with comfortable valuations and attractive dividend yields.
He also remains positive on select non-ferrous metal stocks. According to Shah, a broader base metal rally could continue over the next six to 12 months, creating opportunities in Indian companies that offer exposure to commodities such as copper, aluminium and zinc.
Travel, energy and power themes
For investors with a 12-18 month horizon, Shah sees energy as another theme worth watching. He expects power and energy-related stocks to recover after their recent weakness.
Travel and tourism is another theme he believes could perform well, along with PSUs and technology.
At the same time, Shah cautioned against excessive diversification. He believes the current market is favouring a small group of companies that have strong businesses and reasonable valuations, while many other stocks continue to struggle.