Goldilocks Premium Research predicts that the recent local election jitters have been discounted by the markets, and they have been working with a target of 18,900 for the market. However, the market has breached 19,000, indicating that there may be more downside ahead. The market could see a bounce from an important support level, but there is still a lot of potential for price correction and time correction. The market is not expected to turn around quickly like it has in recent months.
Goldilocks Premium Research believes that if 18,900 were to break, there could be another 400-500 points downside towards 18,400-18,500. They advise against bottom fishing at this time due to the leadership coming from many stocks and sectors on the downside. In addition, midcaps and small caps have room for further downside after a parabolic rally in recent months.
Goldilocks Premium Research suggests being conservative and cautious during this time. They believe that not just India, but global markets are under pressure. They point out that even indices like the Russell 2000 in the US are near 52-week lows. Given all the geopolitical developments, it is understandable that markets are reacting negatively.
In terms of individual sectors, Goldilocks Premium Research sees weakness in the banking space. Both private banks and PSU banks are looking weak, and Bank Nifty has taken leadership on the downside. They expect the Bank Nifty to test levels of 41,500 and possibly even go below 40,000 over the next few weeks. Goldilocks Premium Research advises staying away from banks and moving towards defensive sectors like pharma, IT, and gold and silver.
When asked about when the downside might get arrested and if market leadership will change afterwards, Goldilocks Premium Research cautions against expecting a quick turnaround this time. They believe that given current geopolitical developments and upcoming elections, there is a high probability that the market may not make a new high for a long period of time. While SIP money will continue to support the market, the global charts indicate a longer downtrend.
Goldilocks Premium Research also highlights that two stocks, Reliance and HDFC Bank, have been lagging and not contributing to the index’s performance. This is unlike previous rallies where these stocks played a significant role.
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