Consumption, not capex, will drive India’s market story in FY26: Equirus Securities

Maulik Patel, Head of Research at Equirus Securities, believes that the Indian market outlook for 2025-26 (FY26) will be shaped more by consumption than capex.

Rural consumption is picking up after years of weak growth, supported by higher farm incomes and a good monsoon, said Patel, adding that this trend looks structural rather than temporary.

Urban demand is also expected to strengthen as the increase in tax exemption limits and cut in goods and services tax (GST) rate will boost discretionary spending and big-ticket purchases. Patel clearly prefers consumption plays over capex, where private investment has remained sluggish despite steady government spending.

Among sectors, he bets on autos, especially two-wheelers, cement, fast-moving consumer goods (FMCG), agri inputs, and non-banking financial company (NBFCs) that benefit from rural revival and easier credit.

Patel is also optimistic about cement as industry consolidation and lower energy prices will finally improve pricing power and volumes, with companies like UltraTech Cement, JK Lakshmi Cement, and Nuvoco Vistas Corporation expected to benefit.

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In capital markets, Patel sees risk for brokers dependent on derivatives volumes if SEBI’s plan for longer expiry cycles comes into play, but is positive on wealth managers and asset management companies (AMCs), expecting stronger systematic investment plan (SIP) flows.

He believes foreign institutional investors (FIIs) are just being cautious, waiting for better valuations before returning in a big way. “Domestic SIPs of nearly ₹20,000 crore a month are what’s holding the market up,” Patel said.

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Patel also underlined the macro watchpoints: earnings momentum, rural demand, and financing conditions as positives, while tariffs and global geopolitical risks remain the biggest uncertainties for Indian equities.

For the entire interview, watch the accompanying video

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