Gautam Shah’s Best Bets As He Sees Nifty Laying Foundation For 18,500

“If I was in a closed room, just looking at the charts and not knowing what’s happening around the world, there’s no reason to be not bullish," Shah, founder of Goldilocks Premium Research, said in an interview with BloombergQuint's Niraj Shah. "There’s a saying that a known devil is better than an unknown devil, and it pretty much sums up the context of what’s happening in the markets in the last one year."

The silver lining, said Shah, is that the "sideways consolidation in the last three months is a textbook-style bull trend”. Liquidity is being provided through retail participation, he said.

Charts suggest Nifty 50 could test 15,350 in the near term, he said. “But looking at the way global markets are, how India VIX has behaved, and [given the] sectoral standing, I think we have laid the foundation for a move to 16,000 at least and there are immense opportunities even at these levels,” Shah said. He sees Nifty moving towards the 18,500 target in the next one year.

There’s been frenetic rotation among sectors that are driving markets higher, and currently it's banks, according to Shah. "In the last six weeks, Bank Nifty underperformed and therefore Nifty found it difficult to cross resistance levels; every time we got to the 14,800-900 mark, it faltered. But now with Bank Nifty seeing a 2,000-point rally in a matter of one week, clearly this is the index that will lead it.”

Banks and Reliance Industries Ltd. put together are helping the Nifty, aided by Larsen and Toubro Ltd. and ITC Ltd., he said. His top three sectoral bets are banks, autos and pharmaceuticals.