Synopsis "Pharma is close to turning the corner. It might be a slightly contrarian call but when we look at the charts in the last couple of weeks, we just get the feel that the selling climax has already played out and that was triggered by a Divi’s Lab. If we look at some of the other names like an Alchem or even a Lupin or a Dr Reddy's, the downside is little, maybe 3% to 5% and the upside potential is 10%, 15%, 20%. " ETMarkets. com Related Top up in IT, capital goods, auto and PSUs; rest is an avoid: Gautam Shah Kunj Bansal on 3 reasons for RIL underperformance; says market focusing on IT, banking Still negatively biased in market; have 6 picks in defence, cap goods & infra: Nischal Maheshwari “I do not want to be standing in the middle and will rather stay on the fence and let Adani stocks do what they want to do. I am not a buyer nor am I a seller at high levels. It is just an ignore for me. There are much better pockets and bets in the market where you are getting a lot of momentum. I would rather focus there,” says Gautam Shah , Founder, Goldilocks Premium Research How would you approach the Adani Group of stocks? It has got a little popular and it has moved deep into retail now. We are avoiding the Adani Group now. The last couple of years was a great money-making opportunity on the long side. Last couple of months was a great opportunity on the short side. It has all played out. Now it has gotten into a very noisy kind of a phase wherein there is no trend, rallies are getting sold into and dips are getting bought into because some people feel that it is a little overdone which is also a fair argument. I do not want to be standing in the middle and will rather stay on the fence and let Adani stocks do what they want to do. I am not a buyer nor am I a seller at high levels. It is just an ignore for me. There are much better pockets and bets in the market where you are getting a lot of momentum. I would rather focus there. Purely on the charts without getting into a buy or a sell recommendation here. If you have to analyse the charts of the top three or four Adani Group of stocks, do you think the panic lows were made closer to the first week of February? Do you think those panic lows could be revisited or will they remain intact? First things first, it has already been a very large fall and it has been very fast. In a matter of six weeks, stocks have fallen 40%, 50%, 60%, 70% and now that is large by all standards. So the panic lows will hold for some time. But if my overall market view is negative and I believe that eventually the indices will see a breakdown. At some point of time, the recent lows could be retested and maybe even broken by a small margin. I do not see clear cut bottoming signs. If at all, I would still look at it. Ambuja is where I feel the recent lows might still hold out. I would still look at that stock but everything apart from Ambuja, is still too early to say that the worst is over. You are quite positive when it comes to the auto space. What are the top bets there? The autos have done quite well. In a difficult market environment, they held out really well. Look at M&M, how it stood out. Maruti has been respecting support levels. Tata Motors has rebounded from a long-term support and all of these three stocks which I mentioned should do well and it should propel the auto index to new lifetime highs. MORE STORIES FOR YOU ✕ Top up in IT, capital goods, auto and PSUs; rest is an avoid: Gautam Shah Kunj Bansal on 3 reasons for RIL underperformance; says market focusing on IT, banking Still negatively biased in market; have 6 picks in defence, cap goods & infra: Nischal Maheshwari « Back to recommendation stories I don't want to see these stories because They are not relevant to me They disrupt the reading flow Others SUBMIT If I am not wrong, our working target has all along been about 15,000. That is another 10-12% from where the index is right now. Somehow they have just gone negative beta. Every time markets fall, there is a lot of strength in the auto space. Fundamentally, people talk about input prices and the impact that could have on the entire basket of stocks. But as a technician, I see a lot of relative strength because when one divides the auto index by the Nifty, you get a sense that this is one of the few sectors in the market which is in an uptrend. I think this is going to continue and I would focus on the three or four stocks that I mentioned. I would not go to the other side. I would not go to Hero or Bajaj because there are still problems on the charts and fundamentally is what I hear. But in the other three stocks which I mentioned, I am more convinced. Every year we get a strong sectoral rotation . For example, 2021 was all about IT and fintech. Then the good old value trade made a comeback. 2002 belonged to NTPC , ITC and perhaps Coal India . For 2022, if markets have to rotate, are you making a case that it could be autos which for almost four to five years, have been in a sideways market? Yes, for this year, it has the potential to be a theme that could stay strong the entire year. But along with auto, I definitely want to add IT. That will be a bigger theme and a better place to hide. The third theme which I have really liked is capital goods. I still love the way the entire setup is. L&T has been our favourite for a long time now and it is going to do much bigger things once the market stabilises and not just L&T, Siemens , Cummins India and ABB . Lovely long-term setups, great fundamentals, they are all syncing in beautifully. For this year, auto, IT, capital goods looks like the rotation has gone into these nets. For those who bought pharma, with the exception of Sun Pharma which has given decent returns, Lupin has been a disaster. Natco has been a disaster. People are still feeling the heat of the selloff in Divi’s. Is pharma in a tough spot? It is close to turning the corner. It might be a slightly contrarian call but when we look at the charts in the last couple of weeks, we just get the feel that the selling climax has already played out and that was triggered by a Divi’s Lab. If you look at some of the other names like an Alchem or even a Lupin or a Dr Reddy's, the downside is little, maybe 3% to 5% and the upside potential is 10%, 15%, 20%. So for aggressive traders and aggressive investors who do not mind that patience and do not mind to take that contrarian call, pharma is a space one can start nibbling into. Stay with the top names, stay with Alchem, great earnings, great track records, stay with Dr Reddy's, Sun Pharma, Cipla obviously and if you are stuck with these four and if the pharma index does turn, I am pretty confident that it will do well. It is a sector that we are closely following and we have a contra view on the positive side. Don’t miss out on ET Prime stories! Get your daily dose of business updates on WhatsApp. click here! Tuesday, 14 Feb, 2023 Experience Your Economic Times Newspaper, The Digital Way! 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