Q1 2026 was a quarter of two halves
Q1 2026 was a quarter of two halves for Indian equities. January saw broad-based selling driven by FII outflows, while February-March staged a recovery led by domestic institutional buying and encouraging macro data. As we enter Q2, our research team sees selective opportunities across three key sectors.
Infrastructure and Capital Goods remain our top conviction
Infrastructure and Capital Goods remain our top conviction pick. The government's ₹11.1 lakh Cr capex allocation in the Union Budget, combined with accelerating project execution, creates a multi-year tailwind for companies in roads, railways, defence, and power transmission.
Healthcare and Pharma is our second-highest conviction se...
Healthcare and Pharma is our second-highest conviction sector. The global biosimilar opportunity, combined with India's cost advantage in API manufacturing and the US patent cliff (over $80 billion in branded drugs going off-patent by 2028), positions Indian pharma companies for sustained earnings growth.
Finally, Financial Services , particularly private banks
Finally, Financial Services , particularly private banks and select NBFCs , offer attractive valuations after the recent correction. Credit growth remains healthy at 14-16%, asset quality metrics are at multi-year bests, and the RBI's accommodative stance supports net interest margins.
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