Speaking to ET Now, Shah said that each time the Nifty approaches 26,200, it experiences hesitation, but this consolidation phase is only temporary. “The market is just taking a pause below previous highs. With good support at 25,600, the setup remains very strong. Once the index decisively breaks above 26,200, we could see a 5–10% upside from current levels,” he said.
He noted that the recent 1,500-point recovery from the lows reflects strong market resilience. Improving macro indicators, stabilizing GST collections, and reduced FII selling pressure have strengthened market sentiment. “Technically and fundamentally, the market looks healthy. Dips are being bought into, and the structure is pointing upward,” Shah added.
Sectors that will drive the next market rally
According to Shah, Banking, PSU stocks, and Metals will lead the charge as the market pushes to new highs.
Banking: “Banking has single-handedly powered the Nifty’s rally. Once Bank Nifty crosses 58,500, we could see levels above 60,000. PSU banks, in particular, are setting up beautifully for the next leg,” he said.
Metals: Calling it the “poster boy for the next 6–12 months,” Shah believes that base metals such as copper, zinc, aluminium, and nickel show strong technical strength. Stocks like Hindalco, Nalco, and Tata Steel are emerging from multi-year consolidations and could outperform.Real Estate: “After 18 months of consolidation, realty stocks like DLF, Godrej Properties, and Sobha are showing signs of revival. As the economy picks up, real estate will mirror the broader growth,” he added.
PSU banks vs private banks
Shah sees a clear leadership shift. “Private sector banks will do well, but don’t expect supernormal returns. The real value is in public sector banks, where valuations remain compelling,” he said.
IT sector and consumption outlook
Shah remains cautious on IT stocks, calling the sector an “underperformer” for the next few quarters. “There’s a disconnect between Nasdaq and Indian IT. Too many headwinds — AI disruption, valuations, and global uncertainties,” he said.
In contrast, within consumption, Shah prefers selective plays like ITC over other FMCG heavyweights. “ITC has delivered 2.5x returns in the last few years and is simply consolidating. The relative strength is still in its favor,” he added.
Themes to watch in 2025
Shah believes the market’s next structural trends will emerge from four pockets:
- Financials and NBFCs
- Metals and Commodities
- Real Estate and Home Improvement
- PSU and Government-Linked Enterprises
He advises investors to stay thematic and stock-specific. “This is not a market to chase euphoria but to pick themes intelligently. The next breakout is coming — and the winners will be those already positioned,” he said.