What should one expect because I am sure the charts must be going all over the place with the news flow being so volatile?Dharmesh Shah: Yes, definitely, the things are not in line with expectations. But we believe the market should form more of a higher base formation in this current corrective phase.
If you look at the market from 21,900 to 23,800, we are almost 2,000 points without any major corrections. So, always market requires some of the other reason to fall. Previously it was earnings, then it was FII off flows. This time it looks like the Trump tariff war that is something putting the pressure on the Indian market. We believe market should see more of a higher base formation in this range of 22,500 to 22,800, it remains to be the very strong support for the Nifty and we expect that to hold in this current corrective phase and maybe when next week things should start getting settled then we should see a pullback happening towards 23,500 to 23,800 which was the previous high. So, more for consolidation. Let us not forget we are entering into the result season. So yes, we may see a more of a stock specific action going forward for the market. So, more for consolidation is expected in this range of 22,500 to 23,800 going forward.Let me come to you with a pack which has been reeling under a lot of selling pressure of late and that is Nifty IT. How do you play that counter? More pain left there because we were expecting Nasdaq for a further fall, which we saw coming yesterday, 6% fall on Nasdaq. Indian IT continues to reel under pressure. We are trading with cuts of 3%. Further pain left there?Dharmesh Shah: If you look it, so post Trump tariff war the chart seems to be not so great for the IT sector and I would like to say that we should be focusing more towards the domestic rather than to the export related side.
So, yes, if you look at the index of Nifty IT, the long-term trendline joining the lows of 2020 and 22, that has seen a breakdown and we believe this breakdown should continue going forward also, so the corrections or corrective phase for the IT sector as a whole should continue. So yes, as a sector, we should avoid, maybe things are much at oversold territory right now in IT sector, so minor pullback cannot be ruled out. But if you talk from the medium-term perspective, IT as a sector should remain under pressure going forward. So, some of technical pullback should be looked at as an exit opportunity in most of these IT stocks. Are any of the sectors looking good to you at this point in time? Do you think there is any place that one can venture, given the fact that, yes, this tariff, the tantrums, the way how the markets are actually reacting, ultimately, it is just the near to medium-term blip that you will see in the markets. Long-term story, hopefully, will remain intact for India and are charts reflecting any of the sectors that we can look at right now to buy on dips?Dharmesh Shah: Definitely, if you look at the Indian story we are in the structural bull market and inside the structural bull market, corrections are part and parcel, and that is what right now happening in the Indian market. Coming to the sectors, yes, definitely, we focus towards more towards the domestic side. It is the right time to stick to the domestic side, where again the sectors like banking, again financially, if you look even in this current corrective phase banking as a sector clearly is showing the relative outperformance even in this current corrective phase.
So, yes, banking, as we are going towards the RBI policy next week expecting a rate cut and things should get better overall for the banking as a sector. So, yes, we remain to be positive for banking as a sector, again, inside the banking we remain to be constructive, positive for NBFCs where stocks like AB Capital or something like L&T Finance are the ones where we believe 10% to 50% upside cannot be rule out from the current level. So, banking, again, private, as well as PSU banks, both look positive. Apart from banking, again, we remain to be positive on PSU stocks.
Now, coming to PSU, defence as a sector which was in the corrective phase for last six months and it seems that most of the negative seems to be getting priced in the defence, so yes, defence as a sector we remain to be positive for stocks like HAL or Cochin Shipyard are the ones where we remain to be positive going forward.
So, PSUs, banking, metals. Now, metals it is a mixed picture right now but from the medium term to long term, the way the dollar index has seen a sell-off from 110 to 102, it looks like something positive for metals as a sector.
Maybe, the short-term pain, maybe because of sentiment we are seeing right now selling pressure happening in most of the metal stocks, but to talk from the medium-term perspective, it is the right time to acclimate good quality steel stocks like Tata Steel, SAIL, JSW Steel are the one should definitely look out from the medium-term perspective.
