With market in a correction phase, IT stocks look very good at current market price and in fact the downside is very limited . From the large caps perspective – improved order sizes and better profitability – you want to pick up some of these i.e. TCS , Infosys, HCL Technology ,Tech Mahindra and Wipro . IT really offers a great buy and will be the top pick.
FMCG may see less damage as defensive buying along with valuation comfort may keep them immune to this correction. ITC, HUL , Marico , Dabur after a very long consolidation of last five-six months, is now giving clear signs of breakout.
Pharma stocks can also see a build-up in positions especially large caps like Sun Pharma and Dr Reddys ; even mid cap pharma space also has great potential like Biocon
Banking stocks , we see no major concern in their fundamentals. Banking stocks have reported in-line results, with lower provisioning and healthy credit growth aiding profitability. we may see interest in these especially in PSU banks and also large caps banking stocks such as HDFC , ICICI . Axis and Kotak.
Be cautious on small and mid cap stocks – In the current market scenario, investors should remain cautious about investing in momentum stocks or small-cap stocks which have remained overheated over the past two years. Any sustained period of sideways or downward movement in momentum stocks can trigger a sell-off in these stocks. Investors, therefore, should consider the risk involved before making such investments.
Robins Joseph , SEBI Registered Investment Adviser , Certified Financial Planner. Founder of MyGuide2Wealth (www.myguide2wealth.com) based in Noida specializing in wealth, investment, retirement services with clear aim of Spreading financial literacy and advocating on India’s strong equity story.