Gautam Shah, founder & chief strategist at Goldilocks Premium Research, believes that the rally in midcaps is here to stay while the largecaps are likely to see selling going forward.

According to him, the Nifty is consolidating in the range of 12,000-12,400.

“There are too many contributors on the way down. When a rundown of top 100 stocks... about 70-75 stocks among the top 100 have a bearish setup at this point of time and therefore, it is very difficult to believe that the market can sustain beyond levels of 12,300-12,400,” Shah said in an interview with CNBC-TV18.

“Some of the top names which used to take the market higher have faltered. HDFC Bank is right up there and some of the other heavyweight names as well are looking heavy. So I am tempted to believe that this rally will get sold into...," he added.

Stock-specific, Shah said, “At this point of time, given the way the largecaps and even the midcaps are placed, we would want to be little cautious. This is a time to be very stock specific and we have been recommending our subscribers to top-up in the defensive space... so IT and pharma are on top of the list..."

On Bank Nifty, he said, “We highlighted last time that the Bank Nifty is one space that is taking this market down. This is never good news because Bank Nifty has to do well whenever the market does well..."

“The top three or four names barring ICICI Bank and Kotak Mahindra... most other stocks in the space are looking quite bad and let’s not even talk about PSU banking names," Shah added.