Here’s Why Gautam Shah Is Betting On These Three Sectors

Indian markets have recovered marginally after tumbling to their lowest levels on the back of the novel coronavirus outbreak since the global financial crisis of 2008.

And Gautam Shah, founder of Goldilocks Premium Research, said the pullback in the NSE Nifty 50 over the past four days was “large by all standards”.

Shah’s betting on pharmaceutical, information technology and consumer goods sectors. “Even if the markets go to lower lows, stocks in these spaces won’t go as low and that’s the reason we are liking them,” he told BloombergQuint in an interview. “They will give you safety and a lot of these stocks have a high dividend yield as well.”

Highlights:

• Bearish momentum which was there in the past few weeks is absent now.
• Markets are seeing some support in the 8,000-mark which is a long-term support.
• In 3-4 weeks, we might see markets in this range with upside being capped to 9,000-9,500. Midcaps and smallcaps will start to do well.
• A lot of large-cap stocks are over-owned and can see selling pressure, but midcaps and small caps are of value.
• Individual stocks will do better than benchmark indices.
• With the unprecedented fall we have seen in the Bank Nifty, there’s no indication where we can say it has bottomed out. Apart from ICICI Bank Ltd. and Kotak Mahindra Bank Ltd., nothing in the Bank Nifty has a good setup right now.
• If Bank Nifty stabilises, markets can see stabilisation otherwise there could be another round of correction led by Bank Nifty.
• HDFC Bank Ltd. is so over-owned it will continue to underperform going forward and if this happens it will not only impact Bank Nifty and Nifty, but the overall sentiment.
• Anything between 10,00-11,000 in the midcap index is a great opportunity to buy.
• · I wouldn’t look at the beaten down names. Relative strength is the only mantra now. Don’t look at technicals and fundamentals as markets are not respecting that.
• Stocks that are doing better than midcap index will end up being multi bagger.
• Don’t want to commit on real estate; clearly avoid.
• I want to stay in top pharma stocks like Cipla Ltd., Dr. Reddy’s Laboratories Ltd. Sun Pharma Ltd. is overdone on the downside.

Watch the full interaction here: