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Stay away from auto and capital goods stocks: Gautam Shah, JM Financial

February 12
18:02 2019

The market seems to be in a consolidating phase and has been trading in the range of 300 to 350 points for two and a half month, said Gautam Shah, associate director and technical analyst of JM Financial. The disconnect between the largecaps and midcaps is getting wider, he added.

He said, “Till Nifty stays above 10,750-10,800 area, which is an important support, the chances of an attempt to breakout beyond 11,000 exists and that could potentially take the Nifty towards the level of 11,350 and then possibly 11,700. So remain optimistic on the market at this point in time.”

If the midcap index were to rebound from here and were to see a sustainable recovery, the Nifty would find it easy to rally, and so would watch the midcap space closely for next one week, he said.

“The battle lines are pretty clear. On the downside 10,650 is investor support and around 11,000 is investor resistance and once the market substance above 11,000 then wouldn’t be surprised to see a 1,000- point recovery over the next three-six months,” said Shah. However, if the market closes below 10,650, it would be a confirmation that the market is going to see a rundown, he added.

As a strategy, he said it would be advisable to buy strength in this market and look at stocks that are moving with Nifty because the strong are getting stronger and weak are getting weaker. Would avoid being a Braveheart and stay with winners like the FMCG and banking space and stay away from autos and capital goods stocks.

According to him, it is important to have a broader picture because day to day action is unplayable. If one is looking at a two-three investment view then this is the best opportunity to get into midcap and smallcaps. “Would be advisable for investors to initiate SIP in midcap mutual fund,” he said.

Source: CNBC-TV18Not sure which mutual funds to buy? Download moneycontrol transact app to get personalised investment recommendations.

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