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Metals is a money making idea for 2018; Deploy 25-30% portfolio value to the sector

“In the last 1-1/2 years, the metal index has exceeding well. It is trading around 15,300-15,400 on the BSE and our near-term target for the index is close to 17,000 but for 2018 our target is about 21,000 which translates into an upside of 20-25 percent over the next 9-12 months,” Gautam Shah, Associate Director & Technical Analyst at JM Financial said.

The market is likely to consolidate in a narrow range of 10,350-10,600 but there is one sector which is likely to remain in limelight which is the ‘metal’ sector, Gautam Shah, Associate Director & Technical Analyst at JM Financial said in an interview with CNBC-TV18.

“In the last 1-1/2 years, the metal index has exceeding well. It is trading around 15,300-15,400 on the BSE and our near-term target for the index is close to 17,000 but for 2018 our target is about 21,000 which translates into an upside of 20-25 percent over the next 9-12 months,” he said.

The way metal stocks have handled themselves in the last 2-weeks that is quite commendable. It is a place in which investors should allocate 20-30 percent of your portfolio, added Shah.

Commenting on the global markets, Shah is of the view that US markets have made a multi-month top for the US market. If that is the case, Indian markets will be impacted.

From the near term perspective, the pullback rally could stretch towards 10,600. “But, we feel that around those levels we could see a leg down that possibly leads to a lower low. On the downside, Nifty respected 10,300 but if it breaks on a closing basis, 10,000 will act as next support,” added Shah.

The pullback rally of Friday looks temporary and might not see a great follow-up. “From the global perspective, I feel that the US 10-years could head towards 3.2 percent which we have to see if it turns out to be good or bad for equity markets,” said Shah.

“I would be little cautious here anticipating the markets to break down post this rally from here to make a lower low,” he said.

For Nifty Bank, Shah explains that the index has been a weak spot. For the past three weeks, the index has made a lower low almost on a daily basis. It has a weak setup – the bounce back which we saw last week could see another 200 points of the rally but it over in a 1000-point range.

But, eventually Bank Nifty will break down and our target for the downside is 24,000. Keeping that in mind, all rallies should be used as a selling opportunity.
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