Global brokerage Jefferies has identified defence and power equipment companies as among the biggest beneficiaries of India's next growth phase, supported by government infrastructure spending, rising electricity demand, defence modernisation and a healthy pipeline of projects. The brokerage's top picks in the industrial space include Siemens Energy India, Hitachi Energy India, Hindustan Aeronautics Ltd (HAL), Bharat Electronics Ltd (BEL), KEI Industries and Larsen & Toubro (L&T), which it believes offer strong earnings visibility backed by robust order inflows. According to Jefferies, these companies are positioned to benefit from strong order books, improving project execution and better operating leverage during India's rising capital expenditure cycle.
According to Lighthouse Canton's Abhay Laijawala, India's lack of direct AI exposure could prove an 'advantage of absence' as the country offers a deep, listed universe tied to AI spending's next phase. As reported by Reuters, India has little exposure to chip fabrication but offers a comprehensive ecosystem including power, data centres, electrical equipment, cooling systems, engineering and capital goods. This positioning contrasts sharply with South Korea and Taiwan, which have experienced foreign outflows in June due to concerns around crowded positioning and index concentration. Laijawala noted that when sector concentration reaches such levels, investors tend to fatally underprice the possibility that risks could emerge from outside the core business model, making India's diversified AI-related investments more resilient.
Jefferies has raised target prices for several companies including KEI Industries (₹6,670 from ₹6,000), Thermax (₹5,930 from ₹5,390), Data Patterns (India) (₹4,875 from ₹4,500), and CG Power (₹840 from ₹745). The brokerage retained its 'Buy' recommendation on KEI Industries and views the company as a comprehensive play on multiple growth themes, including power infrastructure, private capex, housing demand and export opportunities. For Thermax, Jefferies cited stronger industrial activity and improving order inflows, with demand for boilers, turbines and generators remaining a key driver. The brokerage expects Data Patterns (India) to benefit from increasing domestic defence spending and opportunities linked to the Multi-Role Fighter Aircraft programme.
India's equity markets may have emerged from the worst phase of the recent correction, with leading fund managers arguing that the next leg of returns will be driven less by broad market moves and more by stock-specific opportunities across sectors where investor expectations remain subdued. Sunil Singhania of Abakkus Asset Manager noted that the past two years had tested investors through trade tensions, tariff uncertainties, and West Asia conflict that drove crude prices up to $120 per barrel. However, he emphasized that the Indian economy has demonstrated remarkable resilience, aided by government policy measures, GST-led recovery and stronger-than-expected corporate earnings over the last two quarters. Sandeep Tandon of Quant Mutual Fund highlighted that behavioural indicators provided the clearest evidence of market bottoming, noting that people had virtually given up on India with negative sentiment reaching unprecedented levels. The experts believe things are definitely bottoming out, with Singhania adding that we are in a very, very good spot despite ongoing global uncertainties.
Sivaram highlighted that nominal credit growth has remained around 12% over the past two to three years and expects sustained credit growth of 18-20% going forward. As reported by ET Now, he noted that India offers multiple investment themes rather than being driven by a single theme, with the financial services sector being a key area of conviction. Sailesh Bhan of Nippon India Mutual Fund identified private sector banks as trading at their cheapest valuations ever despite maintaining strong asset quality and healthy balance sheets. He also highlighted pharmaceuticals as a sector with sensible valuations and very low expectations, while noting that the consumer sector, while still relatively expensive on traditional valuation metrics, could surprise positively because market expectations for growth have fallen sharply. The experts emphasized that manufacturing will be one of the defining investment stories of the coming decade.
Domestic benchmarks Nifty 50 and Sensex are down about 11% and 13% respectively so far in 2026, after fears of AI-led disruption tanked the heavyweight IT index 27% and the crude price spike after the Iran war worsened the macroeconomic outlook. According to Lighthouse Canton, foreign investors pulled out funds worth a record $30 billion from equities so far this year, with the two markets overtaking India in terms of market capitalisation in the past month. However, Laijawala believes foreign outflows from India may have largely run their course, with the country's status as one of the world's most oil-vulnerable economies potentially limiting further exits. If geopolitical tensions ease and oil prices retreat, few markets stand to benefit as much as India, he noted, adding that such a move could trigger a wave of foreign buying into Indian equities. Sandeep Tandon noted that after two years, they had turned bullish on small-cap and micro-cap stocks, observing a capitulatory move in mid-caps, small-caps, and particularly micro-caps between January and March that created significant opportunities.
