Upside of 5-7 pc on midcap IT stocks: Gautam Shah

ET Now spoke to Gautam Shah, CMT and Vice President, Financial Services, JM Financial, on his views on the market.

ET Now: Your thoughts on midcap IT space and the midcap PSU space?

Gautam Shah: Large cap IT stocks are in a process of topping out and the scenario hasn't changed even after Infosys results. Even before the Infy results, most of the technical indicators had not been supporting the high which some of the large cap IT stocks have been seeing.

Now what has happened is that the action has shifted to the midcap IT pack, which is quite understandable because you are seeing a lot of midcaps and small caps do very well while the index is going nowhere.

So yes, you could see some more trading upside, maybe another 5% to 7% upside in the midcap IT stocks. So the entire pack would be a good trading idea for the next 1-1.5 weeks.

Coming to PSUs, the OMCs are the ones which we continue to like. I know yesterday was a bad day for the sector but after the up move that the entire segment has seen over the last few months, any further downside, maybe another 3-4% downside and they will complete a technical retracement and thereafter, they would again be a buy for much higher levels. After consolidating for almost 4 to 5 years, it is now time for OMCs to continue to outperform and therefore, we would recommend a buy at lower levels.