Speaking to ET Now, Shah said that whenever the Nifty approaches 26,200, he hesitates but this consolidation phase is only temporary. “The market is taking a break below previous highs. With good support at 25,600, the setup remains very strong. Once the index settles above 26,200, we could see a 5-10% upside from current levels,” he said.
He noted that the recent recovery of 1,500 points from the lows reflects strong market resilience. Improving macro indicators, stabilizing GST collections and reduced FII selling pressure have strengthened market sentiment. “Technically and fundamentally, the market looks healthy. Buying is happening on dips and the structure is pointing upwards,” Shah added.
Sectors that will drive the next market rally
According to Shah, banks, PSU stocks and metals will take the lead as the market aims for new highs.
Banking Industry: “Banking industry has single-handedly driven the Nifty rally. Once Bank Nifty crosses 58,500, we could see levels above 60,000. PSU banks in particular are preparing beautifully for the next leg,” he said.
Metals: Calling it the ‘poster boy for the next six to 12 months’, Shah believes base metals such as copper, zinc, aluminum and nickel show strong technical strength. Stocks like Hindalco, Nalco and Tata Steel are emerging from multi-year consolidations and could outperform. Real Estate: “After 18 months of consolidation, real estate stocks like DLF, Godrej Properties and Sobha are showing signs of revival. As the economy picks up, real estate will mirror broader growth,” he added.
PSU banks vs private banks
Shah sees a clear leadership shift. “Private sector banks will do well, but don’t expect super-normal returns. The real value is in public sector banks, where valuations remain attractive,” he said.
IT sector and consumption prospects
Shah remains cautious on IT stocks and calls the sector an “underperformer” in the coming quarters. “There is a gap between Nasdaq and Indian IT. Too many headwinds: AI disruption, valuations and global uncertainties,” he said.
In contrast, within consumption, Shah prefers selective moves like ITC over other FMCG heavyweights. “ITC has delivered 2.5x returns in recent years and is simply consolidating. Relative strength is still in the company’s favor,” he added.
Themes to keep an eye on in 2025
Shah believes the following structural trends in the market will emerge from four sectors:
- Financial Services and NBFCs
- Metals and raw materials
- Real estate and home improvement
- PSU and government related companies
He advises investors to stay thematic and stock-specific. “This is not a market to chase euphoria, but to choose themes intelligently. The next breakthrough is coming – and the winners will be those who are already positioned,” he said.
#Nifty #break #looms #PSU #banks #metals #set #lead #rally #Gautam #Shah