Power to Discretionary: 6 sectors that could dominate markets in new Samvat

Certain themes and sectors such as power, defence, banking & financials, discretionary and manufacturing, among others are expected to hog the limelight in the new Samvat year, said analysts.

The Indian stock markets are expected to kick off Samvat 2083 on a more cautious note as external energy shock overshadows a resilient economy. Record foreign investor outflows and the rupee near ₹95 per dollar have weighed on large-caps, with the Nifty down about 12 per cent in Samvat 2082.

 

Going ahead, analysts expect the benchmark indices, Sensex and Nifty, to break out of this consolidation trend and likely scale new highs on the back of earnings recovery and valuation comfort. 

 

But with the market trend expected to be more selective than broad-based, certain themes and sectors such as power, defence, banking & financials, discretionary and manufacturing, among others are expected to hog the limelight in the new Samvat year.

 

 

"Overall, we prefer sectors where structural demand is supported by visible earnings growth rather than valuation expansion alone," said Ventura's head of research Vinit Bolinjkar. 

 

Samvat 2083: Sectors expected to be in focus

 

1. Power & capital goods

 

Bolinjkar said that capital goods and power remain key beneficiaries of India’s multi-year infrastructure, transmission and industrial capex cycle, supporting strong order books and earnings visibility.

 

Furthermore, the expansion of AI data centres, electric vehicles, industrial activity and digital infrastructure could support demand for power generation, transmission and associated equipment, opined Hitesh Jain of YES Securities.

 

2. Banking & financials

Helped by steady loan growth, Motilal Oswal Financial Services (MOFSL) said that banking and financials would remain in focus in the next Samvat. The brokerage foresees credit growth of 15.1-15.9 per cent in FY27, along with improvement in margins as surplus FCNR deposits are deployed and higher repo rates pass through to loan yields.

 

However, stock selection should focus on asset quality, return on assets and sustainable credit growth, opined Jain as he sees healthy balance sheets supporting earnings growth.

 

3. Defence & domestic manufacturing

Analysts believe that defence remains a structural opportunity, supported by India's focus on domestic manufacturing, import substitution and exports.

 

"However, investors should differentiate between companies with established capabilities and order-book visibility and those where valuations have moved ahead of fundamentals," said Jain.

 

Apart from defence, Indian manufacturers are scaling up across healthcare devices, and auto components. Capacity additions, strong order books and new platforms should drive multi-year growth, MOFSL analysts said.

 

4. Discretionary consumption

Companies with strong distribution networks, pricing power and operating leverage could outperform as demand normalises, believe analysts, with organised players continuing to grab market share.

 

5. Pharma

Pharmaceutical offers a combination of defensive growth, improving product mix and relatively stable cash flows, said analysts, with a weaker rupee seen supporting the exporters, including pharma players.

 

6. Telecom

Telecom remains attractive due to tariff repair, rising data consumption, operating leverage and improving free cash flow. 

 

Sectors to avoid

On the other hand, analysts remain cautious on several sectors such as OMCs, IT, FMCG, consumer durables, paints and select consumer staples.

 

Bolinjkar highlighted that OMCs' earnings remain exposed to crude-price volatility, regulated pricing and policy intervention, which can create sharp swings in profitability.

 

Meanwhile, in IT, analysts continue to face slower global discretionary spending, elongated deal cycles and uncertainty around near-term revenue growth.

 

In consumer staples, Jain highlighted weak volume growth, competitive intensity and margin pressures as key factors that could constrain earnings recovery in select businesses.

 

He cautioned that high capital expenditure without commensurate cash-flow generation can erode shareholder returns.

 

Disclaimer: Views and outlook in this report belong to the brokerages and analysts cited. They do not reflect the views of Business Standard. Readers are advised to exercise discretion.