According to CNBC TV18, Gautam Shah, Founder of Goldilocks Global Research, believes Indian equities could be headed for an upside breakout if geopolitical risks remain contained. The Nifty has been trading in a range of 23,800 to 24,600, but the setup points to an upside breakout. Shah noted that the underperformance of Indian equities versus global peers over the past 18 months appears to have ended, with India's relative performance against global markets expected to improve further.
As reported by CNBC TV18, Shah expects banking and information technology (IT) to lead the next leg of the rally. He believes the IT index could recover 15% from current levels, with the IT index targeting 30,200 initially and potentially 30,500. Shah prefers mid-cap and small-cap IT companies over large-cap names, saying niche businesses linked to artificial intelligence (AI) could outperform as investors look for AI-related opportunities in India. He expects the IT sector to recover over the next six to nine months.
According to CNBC TV18, Shah remains constructive on the broader market, noting that micro-cap, small-cap and mid-cap stocks continue to be in a bull market. The micro-cap index has already gained about 28% from its March lows. He expects broader market indices to deliver another 15-20% upside, compared with around 7-8% for the Nifty. Shah remains positive on the Adani Group, real estate, power, public sector undertakings (PSUs), banking, non-banking financial companies (NBFCs), housing finance companies (HFCs), travel and tourism, and service consumption.
As reported by CNBC TV18, Shah said the recent correction in gold and silver has created a fresh entry opportunity. He identified around $3,900-$4,000 per ounce for gold and around $55 per ounce for silver as favourable levels. Regarding index heavyweights ahead of the earnings season, Shah was cautious on Reliance Industries, saying the stock could remain range-bound from a technical perspective. However, he expects banking stocks to surprise positively if earnings exceed subdued market expectations.
According to CNBC TV18, Shah said a sustained Nifty breakout is likely to be supported by strength in banking and technology, making them the key sectors to watch over the coming months. He noted that India's improving relative strength reflects the market having already priced in concerns around consumption, foreign institutional investor selling, crude oil prices and AI-related disruption. Shah believes the worst for Reliance Industries appears to be over after months of underperformance, with the sector expected to recover over the next six to nine months.
