Financial advisory firm Goldilocks Premium Research has turned cautious on the Indian market, Founder and Chief Strategist Gautam Shah told CNBC-TV18. He also said that a correction will be healthy for the market in the context of a longer or bigger bull run.
Goldilocks has turned a little cautious as the market does not appear to have the strength to take out lifetime highs anytime soon. The recent correction in the Nifty50 index from the 18,600 level "does not look like a plain vanilla variety for the first time in 12 months", he said.
However, Shah believes the medium-term trend in the market remains positive. "This is a bull market that is not ending here; the best of this bull market is yet to come but the fact that we haven’t even seen a 10 percent correction while having started to rally from 7,500 is uncomfortable, and at some point, the market needed a slightly longer correction to have a reality check,” he elaborated.
Speaking on sectors, he said: “It’s just banks that are holding out. In the last six months, whenever the market went through a correction there was some index heavyweight that helped the Nifty come back. But now, the IT space has lost its mojo and if that index breaks a support level, it could see another 10-12 percent downside.”
"Metals are looking toppish. FMCG has lost its sheen. So I do not see too much contribution on the way up, and all of these sectors can potentially contribute on the downside including pharma, which has corrected from resistance," he added.
Shah expects outperformance in pickets such as baking, public sector enterprises and real estate names, and the unlock trade. "I recommend longs on dips, but everything else could see a larger drop,” he added.
For the entire interview, watch the video