New Delhi, Jan 4
India's capital expenditure cycle is showing early but clear signs of a comeback, and market experts believe several sectors linked to investment spending could see strong growth over the next two to three years.
According to the India Equity Strategy 2026 report by Antique Stock Broking, improving economic conditions, policy support, and rising investments by both companies and households are creating the base for a broad recovery in capex.
The report said this revival is no longer limited to government spending, as private investment is slowly returning as well.
The defence sector is expected to be one of the biggest long-term beneficiaries of the capex push.
Higher budget allocations, a strong order pipeline, and the government's focus on indigenisation under the Atmanirbhar Bharat programme are giving defence companies better revenue visibility for several years.
Growing export opportunities are also adding to the sector's growth prospects. Capital goods companies are also likely to see sharp improvement in earnings.
The report notes that new orders are picking up at a time when operating leverage is high. With factories already running above long-term average capacity levels, even small increases in revenue could lead to a big jump in profits.
In addition, valuations in some parts of the sector have corrected, making investments more attractive.
Industrial and electronics manufacturing services companies are set to benefit from both domestic capex and global supply-chain shifts.
As global firms look to reduce their dependence on China under the "China+1" strategy, India is becoming a preferred manufacturing destination.
This trend is expected to support steady demand for industrial equipment, electronics, and automation-related services.
The report also highlights that while government spending on infrastructure continues to support growth, the gradual return of private investment is a key positive change.
This shift is likely to benefit infrastructure developers, construction firms, and engineering companies, especially those linked to roads, railways, power projects, and urban infrastructure.
Lower interest rates, better affordability, and rising household investment are also helping revive housing demand.
This is expected to support real estate developers as well as building material companies such as cement makers and construction input suppliers.
These segments usually pick up later in the capex cycle, but tend to see faster growth once project execution gains momentum.
- IANS
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