Domestic-oriented sectors may lead next leg of rally, says PL Capital; shares list of 17 top stocks

While raising the Nifty’s 12-month target to 26,889, brokerage PL Capital believes that domestic-oriented sectors such as pharmaceuticals, select stables, banks, capital goods, defence and power will outperform in the near term. The benchmark equity index NSE Nifty traded at 25,202 in the morning trade on July 16.   The earnings outlook remains uncertain, according to PL Capital. Since introducing the FY27 Nifty EPS forecast in October 2024, the brokerage has revised its Nifty EPS estimates downward by 7.3% for FY26 and 6.15% for FY27.

On the other hand, consensus estimates have seen even larger cuts of 8.9% and 7.5%, respectively. “Nifty free float EPS grew by 14.2% over FY23–25 and is now expected to grow at a slightly lower pace of 13.4% over FY25–27,” PL Capital said.   Amnish Aggarwal, Director-Research, Institutional Equities, PL Capital, said, “Although a broad-based recovery is yet to take hold, factors such as tax relief, normal monsoons, easing inflation, and lower interest rates are creating conditions for a consumption-driven rebound. Rural sentiment remains resilient, while urban sentiment is gradually improving, particularly in discretionary segments. India’s growth trajectory in FY26–27 will ultimately depend on the combined effect of robust public expenditure, rising private investment, and a sustained recovery in consumer confidence.”   PL Capital further added that the rural economy shows greater resilience, with the rural Current Situation Index (CSI) rising from 96.5 in Jan-24 to 100 by May-25. This recovery is anchored by improved Kharif sowing—up 11% YoY—benign food inflation, and robust government spending in rural development. Headline CPI inflation moderated sharply to 2.1% in June 2025, its lowest in over three years, while food inflation entered negative territory at -1.1%, strengthening real purchasing power for rural households. The landmark Rs 1 lakh crore income tax relief in the FY26 Union Budget is expected to lift disposable incomes, especially for over 5.65 crore taxpayers in the Rs 8–24 lakh annual income range.   Therefore, considering the present market sentiment, PL Capital lists 17 stocks from the large caps and broader markets. Among large caps, the brokerage is positive on ABB India, Apollo Hospitals Enterprise, ICICI Bank, Bharti Airtel, Hindustan Aeronautics, InterGlobe Aviation, ITC, Lupin, Titan and Kotak Mahindra Bank. In mid and small caps space, PL Capital prefers KEI Industries, Crompton Greaves Consumer Electricals, Ingersoll-Rand (India), Astral, Samhi Hotels, Triveni Turbine and Indian Railway Catering & Tourism Corporation (IRCTC) among the top choices.