New Delhi [India], January 3 : India's capital expenditure (capex) upcycle is showing early but credible signs of revival, and market strategists believe several investment-linked sectors are poised to benefit the most over the next two to three years.
According to the India Equity Strategy 2026 by Antique Stock Broking, improving macros, policy support, and rising private and household investment are setting the stage for a broad-based capex recovery.
Defence remains one of the strongest structural beneficiaries of the capex push. Higher budgetary allocations, a robust order pipeline, and the government's continued emphasis on indigenisation under the Atmanirbhar Bharat programme are driving multi-year revenue visibility for defence manufacturers. Export opportunities are also expanding, adding an incremental growth lever.
Capital goods companies are expected to see outsized earnings growth as fresh order inflows coincide with high operating leverage.
With capacity utilisation above long-term averages and a pickup in private sector investment, even modest revenue growth could translate into sharp profit expansion. Valuations in parts of the sector have also corrected, improving risk-reward, the report said.
Industrial and electronics manufacturing services (EMS) stand to gain from both domestic capex and global supply-chain diversification. As multinational companies pursue "China+1" strategies, India is emerging as a preferred manufacturing base, supporting sustained demand for industrial equipment, electronics, and automation-linked services.
While public capex remains supportive, the key shift is the gradual return of private investment. This benefits infrastructure developers, construction companies, and engineering players, particularly those exposed to roads, railways, power, and urban infrastructure, the report highlighted.
Further, it said the lower interest rates, improved affordability, and rising household investment are reviving housing demand.
This, in turn, supports real estate developers and building material companies such as cement and construction inputs, which typically lag early in the cycle but accelerate as execution gathers pace, it added.