Nifty May Fall To 8,000 As Stimulus, Global Cues Won’t Perk Up Markets, Says Gautam Shah
Nifty hit a high of 9,030 and came off to close below 8,900. It’s clear that selling pressure exists at higher levels, Shah says.
The Nifty 50 index may hit a low of 8,000 points, dragged down by financial stocks and as investors remain unenthused by India’s Covid-19 package or global cues, according to Gautam Shah of Goldilocks Premium Research.
The benchmark index hit a high of 9,030 points and came off to close below 8,900. It’s clear that selling pressure does exist at higher levels, the founder and chief strategist at the technical research service provider told BloombergQuint in an interview.
The local news ( Rs 20-lakh-crore economic package) and the strength in global markets have both not been able to perk up the index, he said, adding that it’s setting up for another leg down. All these could push the gauge below 8,820, Shah said. Once this level is violated, the index may fall to 8,360 and eventually to 8,050. On the upside, 9,000-9,050 should remain a ceiling, he said.
The Nifty 50, according to Shah, will be dragged down mostly by the weakness in banking and financial stocks—that have a 36 percent weight in the gauge. The Bank Nifty has been underperforming the benchmark and is on the verge of a breakdown. “We are working with levels of 17,100/16,000 and then even below that.”
On May 12, Prime Minister Narendra Modi announced that India would come out with a Rs 20-lakh-crore economic package, equivalent to 10 percent of the nation’s GDP, to revive the economy that’s headed for its first full-year contraction in more than four decades after the coronavirus outbreak.
Modi’s announcement was followed by the finance minister’s five briefings in as many days, outlining the package’s details. The last tranche of measures was announced on Sunday. Since then, the equity markets have been extremely volatile.
Key Highlights From The Conversation
- Expects a further 15-20 percent drop in auto and metal companies
- Sees signs of weakness for IT and fast-moving consumer goods stocks
- Bullish on pharma, chemicals and insurance
- Sees high chances of Nasdaq correcting from current levels
- Bullish on precious metals
- Expects gold prices to hit lifetime high
- Believes silver could end its seven-year-long under-performance against gold
- Sees a better risk-reward ratio in silver
WATCH | Goldilocks’ Gautam Shah On Market Reaction To Economic Package