Nifty is not going to give you great upside from here but the broader markets will do that, says Founder & Chief Strategist Gautam Shah.
The Nifty is moving back higher on the back of some positive news around the world on the vaccine. It is once again the defensives that are coming to the fore. How are you reading into the current mood in the market and the direction you see us taking from here?
Markets have a trajectory of their own because the moment you try to combine what is happening in the economy and try to map the markets, it is going to be a different ball game altogether. Having said that, we have had a phenomenal run up from the March lows. We are up more than 40% and at levels of 10,600 a couple of weeks back, you had an indication that it was the best attempt for the markets to end the pullback rally and start a downtrend but the support levels never broke.
In fact, in the last six weeks, every time the Nifty got close to support levels, it has found buying interest that tells you that the market is looking into the future and trying to discount some positives that we do not have right now. We have to respect the price action.
From a charts perspective, after yesterday’s fall, the kind of comeback that we have today just tells you that the market is finding a lot of buying interest at lower levels and for a change, the financials have taken a back seat and many other pockets in the market whether it is Reliance NSE -0.26 %, whether it is IT, metals, autos — a lot of them are contributing to the market rally. I think there is some more juice left in this particular move.
We see the Nifty hitting the level of 11000-11050 and around those levels, we will have to review whether there is more upside or not. For now, the opportunity is still on the long side and till the Nifty trades at levels beyond 10550, we remain bullish and our biggest opportunity is on the midcaps and the small caps where there is still a lot more upside to play for.