Indian equities are expected to continue to rally with key sectors such as automobile & auto related, cement, defence, railways, consumer durables, energy, logistics, FMCG, capital goods & engineering, infrastructure, construction, banking & finance leading the way, Pantomas Financial Services Group said in its quarterly market report. These sectors are well poised to outperform in the upcoming upswing, supported by strong domestic fundamentals.
Some sectors, such as information technology, specialty chemicals and metals, have struggled to keep pace but offer attractive value buying opportunities for investors seeking long-term gains at potentially low entry prices.
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The financial conglomerate remains bullish on the Indian equity market overall, citing strong domestic economic growth, supportive government policies and ongoing reforms as key drivers. This structural bull market is expected to continue, presenting an attractive opportunity for mid- to long-term investors.
Sector Highlights
Sugar Industry
The sugar sector remains in the spotlight as the government focuses on increasing ethanol production and aims for a 20% blending target by 2026. The policy, highlighted in the BJP manifesto, will benefit sugar companies, which are heavy users of ethanol. The government’s plan to promote multi-feed distilleries for ethanol production aims to diversify feedstocks beyond sugarcane, which could reduce the sugar sector’s reliance on traditional crops while supporting India’s biofuel targets.
Real Estate, Banking and Financial Sector
The real estate market is expected to grow, driven by government policies and urbanization, requiring debt financing of Rs 140 lakh crore ($170 billion) between 2024 and 2026. Mumbai, NCR and Bangalore are expected to benefit the most from a significant increase in construction financing and lease rental discounts (LRDs), which are expected to grow by 40% over the next three years. This will also benefit the banking and finance sector.
Telecom operators such as Reliance Jio, Bharti Airtel and Vodafone Idea have increased tariffs in the wake of the election results and to monetize 5G services, which may improve the financial health of the industry.Experts believe that the tariff hikes are a positive step and that the industry may be ripe for a revaluation, Pantomas said.
Cement Division
The cement industry is expected to grow at a compound rate of 6-7% over the next few years, with large players expanding through inorganic acquisitions, and the top five players are expected to control more than half of the market by March 2025.
FMCG Sector
FMCG companies have begun providing guidance for rural business recovery. For the first time in several quarters, positive guidance has been given for at least the next two quarters based on factors such as a normal monsoon, bumper rabi crop, bumper wheat harvest and government measures such as higher MSP and increased spending on MNREGA. This is expected to keep rural demand strong throughout the year.
car
India may introduce the FAME 3 scheme to boost sales of electric vehicles in the next budget. Under the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme, electric two-, three- and four-wheelers are expected to be supported and the scheme is likely to be allocated a budget of around Rs 1 trillion.
“The structural bull market in Indian equities remains intact, supported by strong domestic fundamentals, government policies and reforms,” the report added.
“Momentum in corporate earnings growth, strong GST collections, recovery in capex cycle, strong credit growth, robust domestic demand environment and positive global market trends are positive factors, while unexpected spike in crude oil prices, rising trade deficit and geopolitical concerns are potential uncertain risks to overall economy GDP growth in the near term,” said Dina Mehta, managing director at Asit C Mehta Investment Intermediates.
