The NSE's pharma and IT indices have underperformed the benchmark Nifty as both the indices have fallen over 3 per cent since start of this year compared with a gain of a whopping 13 per cent in the Nifty.
Analysts say that it is a good time to buy pharma and select IT stocks as there can be a correction going ahead. Sanjiv Bhasin, executive vice president - markets and corporate affairs expects that markets can see a deep correction in the month of May. He expects Nifty to fall by 500 points as the Nifty seems to be too stretched around 9,350-9,400 levels.
Mr Bhasin adds that it is good time to invest in select pharma and IT shares as the current prices offer good risk-reward ratio.
Mr Bhasin says, "You are getting companies which are huge cash generators trading at 14-15 times only with oversee that FDA approvals, disapprovals and observations and if you can't buy them at these prices then you will never be able to get into these pharma stocks which are not local but globally they have become renowned players."
Dr Reddy's Labs, Lupin, Sun Pharma, Coal India, HCL Technologies and TCS are among his top picks among frontline stocks in IT and pharma space.
Among other shares, he also likes Reliance Power, Gujarat Pipavav and Dish TV.
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