12 hours ago
The Nifty 50 index is poised for a 20% upside in the next 18 months, Gautam Shah of Goldilocks Premium Research told CNBC-TV18 on Thursday, January 30. The index has corrected over 12% from its September 2024 peak of 26,277.
Shah said that the market setup currently is very oversold and that deep cuts from current levels look unlikely.
"“Since the time we started rallying from the COVID lows, every time there has been a correction, we have seen a V-shaped recovery. I wouldn't be surprised if something similar happens. It's not that we have not seen corrections in the past. I remember late 2022 we had 18% fall on the Nifty; everybody questioned the bull market, questioned the fact that India is going to underperform, and then we came back very strongly. I think something similar can happen, because India will have to be aligned with the rest of the world. So, the upside potential is very large," Shah told CNBC-TV18.
The Midcap index, before the two-day rebound, had corrected nearly 15% from its peak, while the Smallcap index was down over 20% from its December 2024 high with at least 15 stocks trading with losses of over 30% in just the last one-and-a-half months.
"You can buy stocks at your prices, which you never got in the last 18 months. So, from a chart’s perspective, your maximum downside is about 2-4% from here, and upside is about 20%. So, as an investor, I want to plan for the same," he added.
The chartist said that the negative factors are already in the price as the market counts down to the Union Budget and anticipating another weak earnings season.
Among sectors that are likely to make a comeback, Shah said that financial services, along with Auto, FMCG and PSU stocks are poised for a strong rebound. Most of these indices have corrected between 20% to 25% from their respective peaks.
"If the Nifty can build up from here and possibly get past 23,350-23,500, all can be well very soon, and because all of our problems have been homegrown, what happens on February 1, will be very critical to the overall trend of the market. So, I would be optimistic. I think from a risk reward perspective, the downside from here is very limited, but as an investor, the upside potential is quite large. I would be constructive from here. The downside is limited," Shah said.
The Nifty is currently trading with gains for the third day in a row. Despite the recovery, the index is down close to 2% this month and is set for a negative January month for the sixth straight year.
