Mumbai, March 13 High-growth stocks are becoming more attractive for investors as the market moves through a phase of correction and consolidation, a new report said on Thursday.
The ongoing market correction is likely to continue over the next two quarters due to capital outflows and a lack of major new reforms.
According to financial services firm Caprize Investment, a turnaround is expected by the second half of FY26, setting the stage for an earnings re-rating cycle.
Caprize Investment believes that high-growth sectors with strong earnings visibility will begin to stabilise as market estimates shift towards FY27 following Q1 FY26 results.
Many stocks with over 25 per cent year-on-year (YoY) growth are currently trading at forward multiples of 15-20 times.
These valuations will look increasingly attractive as the market consolidates and investors begin pricing in future earnings potential, the report said.
A major liquidity event is seen as a key factor for market recovery. While liquidity has been abundant in recent years, the coming quarters may present challenges on this front.
Despite this, several high-growth sectors are expected to offer strong investment opportunities, including discretionary consumption, power, manufacturing, renewables, data centres, and water treatment.
In particular, discretionary consumption remains a major focus, with strong prospects for value retail, jewellery manufacturers, and mid-to-premium hotel chains.
The power sector is also gaining attention, particularly in transformers and transmission EPC projects.
“Short-term volatility can continue in the face of liquidity pressures and earnings normalisation, but sectors like discretionary consumption, renewables, and niche manufacturing offer strong long-term potential,” Piyush Mehta of Caprize Investment said.
He added that the strategic investors, prioritising earnings clarity and valuation discipline, will be well equipped to ride out this fluid environment.
Additionally, the "Make in India" initiative is expected to provide long-term support to the manufacturing sector.
Renewables and data centres are also poised for sustained growth, driven by the increasing demand for digital infrastructure and a push towards sustainability.
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