According to PL Capital, sectors to benefit include auto, hotels, airlines, consumer durables/electronics, QSR, apparel, footwear, building materials, household goods, paints, and AMCs

Stock market has staged a sharp recovery, delivering a return of 10 per cent on the Nifty over past six weeks, a report by PL Capital stated. The India Strategy report also highlighted that Q4 FY25 results so far have exceeded expectations, with EBITDA and PBT (excluding oil & gas) surpassing estimates by 5.1 per cent and 9.2 per cent, respectively.

According to the brokerage, sectors to benefit include auto, hotels, airlines, consumer durables/electronics, QSR, apparel, footwear, building materials, household goods, paints, and AMCs.

Meanwhile, capital goods, defence, hospitals, pharma, EMS, travel, and telecom continue to show strong potential.

Consumer demand has remained subdued over the past few quarters. Although rural demand picked up following last year’s monsoon, urban demand faced several headwinds — including elections, extreme heat, prolonged monsoons, and a spike in food inflation in September. That said, early signs of recovery are emerging in urban consumption, with a gradual but sustained improvement expected in the coming quarters.

In FY25, agricultural production has recorded a growth of 6.8 per cent in Kharif crops and around 3 per cent in Rabi crops. Wheat procurement has reached 29.5 MT. Additionally, water reservoir levels in May are 22 per cent higher compared to the same period last year. A normal monsoon is expected to sustain elevated water tables, which will positively impact the next Rabi crop as well.

PL Capital believes Operation Sindoor could have far-reaching implications for economic trajectory and growth paradigm. The report further cited that Operation Sindoor showcased a transformative application of advanced air warfare, missile systems, and drone technology, reinforcing the strategic importance of the “Make in India” initiative.

It expects higher investments in drones, missiles and UAV’s as they will be most critical part of modern warfare.

Additionally, the suspension of the Indus Water Treaty is likely to unlock new opportunities across EPC, pumped storage projects (PSPs), and hydroelectric equipment.

The market experts expect budget tax cuts to start reflecting in improved demand. Considering the tax cut’s estimated multiplier effect of 2.5x, the resulting demand boost could be around $30 billion.

The stage is set for a domestic demand revival, aided by the lowest food inflation (1.78 per cent) since November 2021 and the lowest CPI (3.16 per cent) since August 2019.

PL Capital is removing Bharat Electronics, Cipla, Maruti Suzuki, Aster DM Healthcare and Kaynes Technology India from the conviction picks and have added Sun Pharmaceutical Industries, Rainbow Children’s Medicare and Hindustan Aeronautics.

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Published on May 23, 2025