Opportunity in IT, pharma stocks

New Delhi: Sectors like IT, healthcare and utilities are providing robust growth opportunities for investors amid cautious sentiments prevailing in the stock market, according to global investment banking major Morgan Stanley.

While the benchmark Sensex gained nearly 1 per cent during the month of July, significant downslide was witnessed in a host of healthcare, oil and gas, metals, FMCG, consumer durables, capital goods and auto stocks.

A number of technology, banking and PSU stocks moved higher on the back of robust earnings growth results during the month.

However, volatility has become a key force in determining the overall stock returns today, rather than the company specific issues like earning results, analysts at Morgan Stanley said.

Investors can shield their portfolios from the impending bear market by investing in stocks with returns less co-related with overall market returns, Ridham Desai and Kuleen Tanna, two India-based economists at Morgan Stanley said in a report.

Earnings growth might be less influential on near-term stock price performance due to the rising risk premium, Desai and Tanna said.

While IT stocks are likely to continue their uptrend over the coming months, significant buying interest might emerge in the healthcare and utilities stocks following the recent downslide in their share prices over the past one month, the market analysts said.

Similarly, capital goods and consumer product stocks might see some big share price gains going forward, but the high level of volatility risk associated with these sectors might undermine their attractiveness, the market observers said.

While IT stocks are likely to continue their uptrend over the coming months, significant buying interest might emerge in the healthcare and utilities stocks following the recent downslide in their share prices over the past one month, the market analysts said.

While stocks from the capital goods and consumer product spaces might see some big share price gains going forward, the high level of volatility risk associated with these sectors might undermine their attractiveness, the market observers said.