Are you doing an undergrad masters (as in a 4 year course with a degree of MSci of MPhys at the end)? If so, and you are only going into second year, then I don't think you should concentrate on which specific research area you want to do your PhD in just yet. I say this because you won't have gone into enough detail in each topic to decide whether you will enjoy researching it yet.
I think if you make sure you have a solid background, and then choose modules that interest you more, you will have an easier time choosing a research area. Personally, I picked my research area very late on at about Christmas time in fourth year!
My advice is that you pick modules that you enjoy (if you get to pick any modules that is) and then perhaps think more about this next summer. You could also try and see if you can help out in labs or something at your university next year as this will look good on PhD applications. Some physics departments have summer research opportunities for undergrads also, so that may be something to look at next year.
As for which institution to apply to, I think it's a bit narrowminded to say that you are looking to apply to oxford and cambridge. Firstly, these are, as you know, very popular universities, and so your application should be very strong (hence the "helping out in labs" that I suggested before). But secondly, and more importantly, not every university specialises in every subject (it would be a bit stupid if they did!) and so, you may find yourself drawn to a smaller university depending on what you choose. So, I advise to keep your mind open!
Which univeristy are you at at the moment? Perhaps you could go and talk to someone in your department about potential research areas. Maybe it's not a suitable time now, but next year I would suggest going to talk to someone as a few of the lecturers I spoke to proved to have a wealth of knowledge!
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