Pick Select SMIDs As Large Caps To See Further Cleanup: Goldilocks' Gautam Shah

Investors must pocket opportunities in select small-cap stocks as the large caps are yet to undergo proper correction, according to Goldilocks Premium Research Pvt.'s Gautam Shah.

For the kind of crazy up moves the markets saw in the last couple of months, a cleanup was always required, the chief strategist of the research firm told NDTV Profit on Friday. "The market went through an amazing internal correction," he said. "In general, stocks are now down anywhere between 20% and 40%."

This is still a consolidation phase, and the markets were still not out of the woods. It is likely to spend more time in a range and not make new highs in a hurry, according to Shah. "The correction started with small caps, they moved to mid-caps and now, we are seeing some large caps come under pressure."

Till the NSE Nifty 50 does not clear the 22,050 level on a closing basis, chances of a dip towards 21,000 are big. It is still a very stock-specific market, but given the big damages seen in the small caps, there are some select opportunities in this space, Shah said.

"I haven't seen in 20 years that the Nifty has lost 2% and the small caps have lost 12%. It's a very unique internal rotational correction that we have gone through," he said.

Shah has a positive outlook on the metal and pharma sectors for the long term. He is bullish on State Bank of India and Reliance Industries Ltd.