According to Anil Rego, founder of Right Horizons PMS, smart money is moving toward quality businesses with sustainable earnings growth rather than reacting to short-term geopolitical or macro headlines. As reported by Mint, Rego expects Nifty earnings growth of around 12% CAGR during FY26-FY28E, with broad-based earnings projected at 12-14% CAGR during this period. Despite uncertain global conditions, investors are becoming more selective, allocating capital to businesses with strong earnings visibility and healthy balance sheets, while foreign institutional investors are broadening their participation beyond index heavyweights into mid- and small-cap segments. Rego emphasizes that investors should not reduce their equity allocation based solely on current market environment, noting this could be an opportunity to increase exposure to equities, particularly in mid and small-cap segments while maintaining overall asset allocation in line with financial goals.
Rego has identified 10 high-potential sectors that could generate alpha over the next 5-10 years, as reported by Mint. The manufacturing sector, currently contributing 16% of India's GDP with a long-term target of over 25% by 2035, benefits from government initiatives like PLI schemes and the China+1 strategy. The electronics manufacturing services market is expected to expand from $40 billion in FY25 to $150 billion by FY30, while financial services and wealth management show significant room for expansion with only 15% of India's wealth currently professionally managed compared to 60-75% in developed markets. India's healthcare delivery market is projected to grow at 10-12% CAGR through FY30, driven by rising insurance penetration and ageing demographics, while the apparel market is expected to grow from ₹5.47 lakh crore in FY23 to ₹10.68 lakh crore by FY27 at an 18% CAGR. The defence sector has reached record exports of ₹38,424 crore in FY26, with 75% of defence procurement reserved for domestic sourcing.
According to Rego's analysis reported by Mint, investors should focus on companies with strong fundamentals rather than reducing equity exposure based solely on current market conditions. While geopolitical risks and tariff uncertainty present challenges, India's long-term growth story remains intact with Nifty earnings growth of around 12% CAGR supported by domestic demand and improving corporate profitability. The re-emergence of tariff uncertainty may create opportunities for quality businesses at reasonable valuations, with India's economy supported by strong domestic consumption and government-led capital expenditure providing important cushion against external shocks. Rego notes that periods of heightened uncertainty often create opportunities to accumulate quality businesses at more reasonable valuations, provided investors maintain a long-term perspective. Key risks include corporate earnings falling short of expectations, sustained crude oil price increases affecting margins, and potential delays in monetary policy easing that could keep interest rates higher for longer.
For high net worth individuals, Rego emphasizes shifting focus from maximizing returns to optimizing risk-adjusted returns, as reported by Mint. While equities remain the primary engine for long-term wealth creation, diversification across multiple asset classes is becoming increasingly important. Fixed income provides stability and predictable cash flows, while alternative investments like AIFs offer access to differentiated strategies. The strategy aims to combine complementary asset classes that perform differently across market cycles, leading to more consistent long-term risk-adjusted returns without replacing equities entirely. Rego notes that building a resilient portfolio requires diversification across multiple asset classes, with selective exposure to global assets, gold and real assets further improving diversification and reducing concentration risk.
