Nifty at 30,000? Anil Rego picks 3 sectors that may outperform market in next 2 years

The rise of domestic investors anchoring market sentiment signals a permanent structural shift in India’s equity market dynamics, says Anil Rego, Founder and Fund Manager at Right Horizons PMS.

In an interview with Ritik Raj of Business Today, Rego said the Nifty's uptrend approaching 26,000 is largely supported by strong economic fundamentals, including healthy GDP growth and steady domestic consumption.

1. With Nifty nearing 26,000, some analysts are projecting Nifty at 30,000. Is this optimism justified, or is the market getting ahead of itself?

The uptrend in Indian equities, with the Nifty approaching 26,000, is largely supported by strong economic fundamentals rather than pure exuberance, though a measured approach is advisable. India’s growth momentum remains healthy, with GDP expanding close to 7.8% in the first quarter of FY26 and annual growth expected near 6.8%. 

This strength has been driven by steady domestic consumption, revival in private investment, and government-led infrastructure spending. Additionally, tax reforms and easing inflation now at multi-year lows have improved both corporate and household balance sheets, giving further confidence to the markets.

That said, optimism should be tempered by global uncertainties. The impact of US trade tariffs, geopolitical tensions, and uneven global demand could still pose headwinds. Valuations in several sectors are near to fair ahead of near-term earnings.

If growth and earnings trends continue on their current trajectory and global risks begin to subside, the Nifty’s journey towards 30,000 should be seen as a milestone achieved through steady, sustainable progress rather than a quick market surge. The broader sentiment remains positive, supported by resilient domestic demand and a stable policy environment.

2. We've seen a ‘tug of war’ where foreign investors sold heavily, but Indian domestic investors bought even more. Is this a permanent structural shift?

This appears to signal a structural, rather than cyclical, shift in India’s equity market dynamics. Over the past few years, several deep-rooted changes have redefined the investor base. The steady rise in household financialization, growth of SIPs, and greater trust in equity as a long-term wealth creator have led to a consistent pool of domestic savings flowing into capital markets.

Unlike earlier periods when markets were highly sensitive to foreign inflows, today’s domestic investors both retail and institutional provide a stable and counterbalancing force during global risk-off phases. Their long-term orientation and monthly inflows through mutual funds and retirement products have helped offset FPI outflows during periods of global tightening or geopolitical tension.

While FPIs will remain important for market depth and liquidity, the centre of gravity has clearly shifted. Domestic investors now anchor market sentiment and reduce volatility, making India less vulnerable to sudden swings in global capital flows. In that sense, this evolution reflects a permanent structural change in the ownership and resilience of Indian equities.

3. If you had to invest in only three sectors for the next two years, what would they be and why?

The most compelling opportunities lie in banking and financial services, consumption and retail, and infrastructure and capital goods. These areas combine cyclical recovery with structural growth, supported by improving macro fundamentals and policy tailwinds.

The banking and financial sector is entering a phase of broad-based strength after years of balance sheet repair. Public sector banks have emerged as credible challengers to private peers, backed by cleaner books, improving credit quality, and strong capital positions. 

Advances are growing at double digits, and technology-driven underwriting has reduced slippages. Alongside, non-bank financial institutions are witnessing healthy traction in affordable housing finance and retail lending, supported by stable asset quality. Together, the sector is positioned for steady earnings growth and potential re-rating as credit demand broadens across corporate and retail segments.

Within this broader financial universe, wealth management is fast evolving into one of India’s most attractive structural growth stories. The rise of the country’s affluent and ultra-high-net-worth households, coupled with a shift from physical to financial assets, is creating a large addressable market. Specialized wealth managers are gaining share from self-managed and unorganized players by offering professional advisory, distribution platforms, and access to alternative investments. 

With India’s top one percent controlling the majority of household wealth and increasingly seeking diversification, the sector is poised for sustained healthy annual growth in assets under management over the next decade. This trend not only benefits wealth managers but also feeds into broader financialization themes across asset management.

In the consumption and retail space, recent tax rationalization under the GST regime has provided a direct boost to household spending power. Lower indirect taxes on daily essentials, packaged foods, personal care products, and footwear have improved affordability and margins for consumer-facing companies. 

Quick service restaurants, grocery retailers, and FMCG players are likely to benefit as consumers shift toward higher-value products and increase their spending baskets. With income recovery visible in both urban and semi-urban areas, discretionary demand should pick up momentum through FY26.

The third area of opportunity lies in infrastructure and capital goods, where India’s investment cycle continues to gather strength. Government-led capital expenditure in transport, housing, and energy transition remains robust, and private sector participation is steadily increasing. Easing interest rates and strong credit flow from banks and development finance institutions are expected to sustain momentum in project execution and equipment demand.

Together, these three sectors offer a balanced mix of cyclical growth, policy support, and earnings visibility. Financials provide operating leverage from credit expansion, consumption benefits from improving household balance sheets and lower taxes, and infrastructure captures the long-term structural push from India’s ongoing investment boom.

4. How are recent GST reforms and government capex plans likely to impact corporate earnings in the coming quarters?

The recent GST reforms and the government’s continued thrust on capital expenditure are set to provide a strong boost to corporate earnings in the coming quarters. The introduction of GST 2.0, focusing on input tax credit rationalization, simplified compliance, and tighter data integration between GSTN and income-tax systems, is expected to enhance tax efficiency and improve formalization across sectors. 

This will particularly benefit companies in manufacturing, logistics, and consumer-facing industries by lowering operational costs and improving working capital cycles.

On the other hand, the government’s sustained focus on infrastructure development and capital spending especially in sectors like roads, railways, housing, and energy is likely to create a multiplier effect on private investment and demand. With private capex gradually picking up and public investments setting the pace, sectors linked to construction materials, engineering, capital goods, and industrial services are expected to see improved order inflows and revenue visibility.

Together, these policy measures should strengthen the earnings outlook for corporate India, with broad-based growth momentum expected to continue as the economy benefits from both structural tax reforms and sustained fiscal push