Dharmesh Shah on 3 sectors to watch out for amid market volatility
Why it matters: Amid volatility, this expert guidance pinpoints sectors and strategies for building resilient portfolios.
- Dharmesh Shah from ICICI Direct observes that the market remains unconvinced by ceasefire news, leading to profit booking and a pessimistic sentiment.
- Market breadth indicates significant pessimism, with only 15% of stocks trading above their 200-day exponential moving average, historically a sign of an intermediate durable bottom forming.
- Nifty is expected to find strong support at 21,900 (200-week exponential moving average) and face immediate resistance at 23,300, with a rally towards 23,800 possible if resistance is broken.
- Investors are advised to construct portfolios in a staggered way over the coming weeks, as major bottom formations are anticipated.
- Key sectors to watch include banking (especially PSU and largecap private banks like Axis Bank and Kotak Bank), autos (M&M, Maruti, Ashok Leyland, and auto ancillaries like tyre stocks), capital goods, and metals, due to favorable risk-reward profiles after recent corrections.
Despite a better day for the market, Dharmesh Shah of ICICI Direct notes persistent investor pessimism, with only 15% of stocks above their 200-day moving average, signaling potential for an intermediate durable bottom. He advises a staggered approach to portfolio construction, identifying banking, auto, capital goods, and metals as key sectors for long-term investors.
