“The market is in a short-term corrective phase after a 1,700-point rally. Support for the Nifty lies near 25,400, and we expect the index to resume its upward trajectory toward 26,300 by December,” Shah told ET Now.
Midcaps setting up for a comeback
While largecaps have dominated the rally so far, Shah expects midcaps to re-emerge as strong performers in the coming weeks.
“The midcap index has broken out of a falling trendline, signaling the end of its corrective phase. This consolidation is making the broader market healthier,” he said.
He believes the next few weeks may see some sideways movement, but midcaps are likely to outperform in the latter part of the year, driven by earnings momentum and improved risk appetite.
PSU banks lead the charge
Among sectors, financials and PSU banks remain Shah’s top picks.“The PSU Bank Index has broken out of a 16-month consolidation. We expect strong performance from this space, led by improving balance sheets and robust credit growth,” he said.Shah’s top stock pick is Union Bank of India, which he believes is poised for a strong breakout.
“Union Bank has formed a classic cup-and-handle pattern with a breakout above ₹154. The stock tends to correct 37–40% before making new highs. It has already corrected 41%, and the rhythm suggests another rally is near,” he explained.
He recommends a target price of ₹168, with a stop-loss at ₹138.
Post-election and Q2 triggers could fuel momentum
According to Shah, the next big trigger for the markets will come after mid-November, once Q2 earnings and election outcomes are digested.
“Post these key events, the market will likely see a more directional move. With liquidity improving and technical supports intact, the broader setup looks positive,” he said.
Strategy for investors: Focus on stock selection
With global cues mixed and valuations elevated in certain pockets, Shah suggests a selective, stock-specific approach.
“This is a stock-picker’s market. Investors should focus on quality names within financials, PSU banks, and midcaps,” he advised, adding that any dip toward 25,400–25,600 levels should be used as a buying opportunity.
Key takeaways
- Nifty target: 26,300 by December 2025
- Strong support: 25,400 zone
- Sectors to watch: PSU banks, financials, midcaps
- Top pick: Union Bank of India (Target ₹168, Stop-loss ₹138)
- Market view: Buy on dips; consolidation phase healthy before next rally