IT, pharma, FMCG stocks are expected to do well next year: Axis Securities

IT, pharma and FMCG are expected to do well next year, according to Axis Securities as Indian markets continued to break records. Supported by strong global cues, Sensex today surged over 500 points to hit 46,000 for the first time while Nifty hit 13,500. Both have hit record highs in 14 of the last 21 sessions. Banking stocks led the gains today with Nifty Bank index rising over 1.5%.

“The market is hitting all-time highs on positive global developments on vaccination, liquidity and improving the economy. Sector rotation has been playing out well. Value plays have done well in recent times. Banking has also done well and the sustenance of BFSI rally will take the market to higher levels,” said Naveen Kulkarni, Chief Investment Officer, Axis Securities.

“While interest rate sensitives and cyclical plays have done well, but defensive plays like IT, Pharma and FMCG will be back in flavour in the new year as earnings visibility will be key,” he said.

Britain on Tuesday started a mass COVID-19 vaccination campaign. Adding to market optimism, Johnson & Johnson said it could obtain late-stage trial results for a single-dose vaccine in January, earlier than expected.

Investors were also encouraged by reports that lawmakers and the White House are making progress toward fresh stimulus for the U.S. economy.

India’s health secretary on Tuesday said the country may approve some coronavirus vaccines over the next few weeks and an estimated 300 million people could be inoculated in the first tranche.

World shares chugged higher today after another round of record highs for major indexes on Wall Street, as hopes flared once again for a new round of aid for the U.S. economy.

Some market observers however warn investors against getting carried away by the rally in some low-grade stocks.

“This bull appears to be on steroids. The short-term trend is positive. Investors can be with the trend with caution. Valuations are rich. A disturbing trend is the rally in low- grade stocks without any fundamentals. Investors should avoid such stocks. Every portfolio will have some low-quality stocks. This is a good opportunity to sell such stocks and park the money in liquid funds to buy quality stocks on corrections,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services. (With Agency Inputs)



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