Buy Stocks From These Sectors To Build A Wealth Creating Portfolio

If you are looking to beat returns over a medium term time frame, it is good to look at stocks that can outperform. Here are stocks from three sectors, where brokerage firm, Prabudhas Lilladher is bullish.

Sector that can be wealth creators

"We expect markets to consolidate and build on recent gains in coming months, although near term volatility can't be ruled out. We believe markets are factoring in softening commodities and mild recession or impact on demand, however any negative surprise any increase in geo political uncertainties remains a key risk. We believe Auto, Capital Goods, Defense, Real estate, Insurance, Hospitals, Travel, QSR and Retail will be among key wealth creators in coming years," Prabhudas Lilladher has said.

Capital Goods

Prabhudas Lilladher remains overweight on the capital goods space and has recommended buying the stock of L&T. "We remain overweight on Engineering/ capital Goods with strong growth potential in consumables, PLI, Defense and technology oriented companies catering to revival of industrial capex. We increase overweight to 360bps as we increase weight in L&T by 50bps," the brokerage has said.

Healthcare

Another sector where the brokerage is bullish is the healthcare sector. The firm has a buy all on the stock of Narayana Hridualya from the space.

"We turn overweight on Healthcare as we add Narayana Hridualya in Model portfolio given strong growth visibility," the brokerage has said.

Banks

The Banking sector is another sector where, Prabhudas Lilladher remains optimistic. "Banks are amongst biggest underperformers since 1st Covid wave. Healthy balance sheets, revival in credit growth and current interest rate scenario augurs well for strong banks. We are overweight on banks by 310bps with no change in earlier weights," the firm has said.

Consumer

The one sector, which will be an underperformer and where stocks buying is not advised according to the brokerage is the consumer space. "We retain underweight on consumption space and remove Britannia Inds from Model portfolio given that recent upsurge in wheat prices can delay the margin recovery. We increase weight on Avenue Supermart by 50 bps on strong long term growth visibility," the brokerage has said.

FII inflows turn positive

Meanwhile, according to Prabhudas Lilladher, FII flows turned positive with strong rebound in markets in past few weeks. "NIFTY moved up by ~12% to 17957 post our anti consensus 19066 NIFTY target call on 13th July. Global markets recovered as commodities cooled off on fears of recession impacting demand in US and Europe, but markets seem to be factoring in a mild recession and not a deep and prolonged contraction in demand. Cost pressures seem to be abating as most Agri commodities ( led by Palmoil), crude, Metals (25-50%) etc. have seen meaningful correction from the peak. Dry Baltic freight index has corrected from 3370 in June 22 1320 currently which will further reduce inflationary pressures," the brokerage has said.

Positive indicators to stock buying

High frequency indicators like GST collection, peak power demand, recovery in Air Travel, Sales of Apparel, QSR, PV, Housing, Capital Goods and improving capacity utilisation are positive. Rural demand has failed to pick up so far despite strong prices as higher costs for Inputs, deficient rains in large states and volatile environment is impacting the sentiments.