India’s current bull market is “unique” and can’t be studied with traditional technical analysis parameters, according to Gautam Shah.
“We believe there’s much more upside because this is the kind of momentum which cannot be broken easily,” the founder of Goldilocks Premium Research told BloombergQuint’s Niraj Shah in an interview on BQ Edge.
Shah expects the Nifty to rise to 15,500 in the medium term. For investors with a 12-18 month timeframe, Shah has set a working Nifty target of 18,000—implying a potential upside of at least 18% from current levels. “There’s some logic to believe that the market may see some correction around 15,500 but I think that will be a passing correction.”
Indian equities have doubled from their lows in March 2020 during the pandemic, with the S&P BSE Sensex and NSE Nifty 50 delivering returns of over 100% since then led by reopening of the economy, high inflows from foreign investors and corporate earnings growth.
The over 1,000-point correction seen in the six days preceding the Union Budget, according to Shah, did a “world of good” to the chart set-up. “97% of the Nifty 500 stocks were trading above their 50-day moving average. This hasn’t happened in 25 years,” he said. “The correction led to that number of stocks falling to 55%.”
Consumer goods and automobiles, Shah said, are the top sectors which will lead the Nifty higher going forward. “Small corrections from time to time will happen but because we don’t have any congestion point at lifetime highs, it’s very easy for the bulls to take the Nifty higher every single day.”