Earnings Engine: The 5 Sectors Driving India’s Next Market Rally

Image Source: Business Today

India’s market outlook for FY26 is turning bullish as key sectors position themselves to drive robust earnings growth. Portfolio manager Ashwini Shami of OmniScience Capital highlights five sectors poised for standout performance, backed by strong macro triggers and policy momentum.

Key Highlights:

Banking & Financial Services: Expected to benefit from rising credit demand, digital banking expansion, and financial inclusion. Robust FII inflows, low inflation, and anticipated interest rate cuts further strengthen the sector’s prospects.

Defence: With a renewed focus on order book execution post-Operation Sindoor, defence companies are set for topline growth. Government initiatives and increased capital allocation are accelerating sector momentum.

Capital Goods: Infrastructure investment is regaining pace, with government capex and supply chain realignments fueling demand for capital goods and machinery.

Power: The sector is poised for growth as energy demand rises and investments in renewables and grid modernization accelerate. Policy support and infrastructure upgrades are key drivers.

EPC (Engineering, Procurement & Construction):

Infrastructure build-out, both public and private, is boosting EPC order books, especially in roads, railways, and urban development.
Sectors like FMCG and consumer durables are being avoided due to growth concerns and high valuations.
Market triggers include inbound FII flows, supportive monetary policy, and a promising monsoon, all expected to lift consumption and GDP growth.

Risks to watch: Geopolitical tensions, US policy shifts, inflation spikes, and high valuations in select segments could dampen sentiment.

These five sectors are primed to lead India’s earnings surge in FY26, offering investors a roadmap for portfolio positioning in a dynamic market.

Source: Moneycontrol