A new analysis suggests India's long-awaited capital expenditure (capex) upcycle is finally gaining credible momentum, setting the stage for multi-year growth in investment-linked sectors. According to the India Equity Strategy 2026 report by Antique Stock Broking, improving macroeconomic fundamentals, sustained policy support, and a pickup in private and household investment are creating a foundation for a broad-based recovery over the next two to three years.
Defence and Capital Goods: Prime Beneficiaries of the Capex Push
The report, cited by PTI, pinpoints the defence sector as one of the strongest structural winners from this investment wave. This optimism is driven by consistent increases in budgetary allocations, a robust order pipeline for domestic manufacturers, and the government's unwavering focus on indigenisation under the Atmanirbhar Bharat (Self-Reliant India) initiative. Furthermore, expanding export opportunities are providing an additional lever for growth for defence companies.
Similarly, capital goods firms are poised for outsized earnings growth. The report highlights that a surge in fresh order inflows is coinciding with high operating leverage within these companies. This combination means that even a modest rise in revenues could lead to a sharp expansion in profits, making the sector particularly attractive.
Manufacturing and Infrastructure Set to Gain
The revival is not limited to a few sectors. Industrial and electronics manufacturing services (EMS) are also positioned to benefit significantly. This growth will be fueled by both domestic capex and the global trend of supply-chain diversification. As multinational corporations actively implement "China+1" strategies to de-risk their operations, India is emerging as a preferred alternative manufacturing base. This shift is expected to support sustained demand for industrial equipment and electronics production within the country.
On the infrastructure front, the gradual return of private investment is likely to boost companies involved in roads, railways, power, and urban development. Concurrently, the residential real estate sector is witnessing a revival, supported by lower interest rates and improved affordability, which is stimulating housing demand.
FPI Comeback and Earnings Growth on the Horizon
In a related development, the report suggests that foreign portfolio investors (FPIs), who staged a massive retreat from Indian equities in 2025, could make a comeback in the calendar year 2026. As per ANI, FPIs withdrew approximately $17.5 billion in 2025, marking the highest annual outflow on record. Antique believes conditions are aligning for a revival next year, as corporate earnings visibility improves, valuations become more reasonable, and macroeconomic stability strengthens.
Corporate earnings are projected to re-accelerate sharply. Anticipated Nifty earnings growth is around 16% compound annual growth rate (CAGR) over the FY26 to FY28 period, a significant jump from the roughly 7% growth seen in the previous two years. However, the report sounds a note of caution, stating that continued global investor fascination with artificial intelligence (AI)-exposed markets remains a risk. This trend could lead to sectoral divergence within the Indian equity market, with capital flowing preferentially to tech-oriented segments.
