Midcaps, Consumption, and Cement to Lead Market Upside in H2: Pankaj Pandey
Pankaj Pandey, Head Research at ICICIdirect.com, discusses the potential for midcaps, consumption, and cement to drive market growth in the second half of the year. Real estate, particularly tier-II players and home-building products, also show promise.
MidcapsConsumptionCementReal EstateGstReal Estate NewsAug 22, 2025
On the consumption side, there are multiple triggers in place. Whether it is FMCG or autos, the second half is expected to see a volume revival. So far, volumes have been muted, but there are enough triggers—from GST to the 8th Pay Commission, which may come into effect next year, along with tax benefits. As a result, the entire consumption basket looks strong. Even niche categories like hotels are looking particularly good, making them another sector to watch.
Pandey is also positive on tier-II beneficiaries of real estate. For example, in the pipe sector, he expects benefits in the second half from channel inventory restocking, along with better volume growth. Accordingly, companies like Astral and Supreme look attractive.
For banks, while Q2 will see maximum margin pressure, from Q3 onwards things should improve. So, overall, the second half looks far more promising, and that is why Pandey believes Nifty levels around 27,000 should not be a big challenge—except for export-oriented sectors.
On the insurance front, the second half should be better for insurance plays. However, with GST at zero percent and without input tax credit, there could be margin challenges since companies may have to pass on some benefits. From that perspective, Pandey is not very bullish on insurance. What he likes more are AMCs. Inflows have been robust, and with overall AUM growth plus inflows, this segment can easily deliver mid- to high-teen growth from a long-term perspective. Companies like HDFC AMC and Nippon look quite attractive to him.
Staying on the GST theme, the rate rejig is underway, and several sectors stand to benefit. For cement, the GST reduction will result in around a ₹25 decline per 50 kg bag, which is clearly positive. Last year, the sector’s growth was muted at just 4%, but this year, more normalized growth is expected, with most pricing hikes holding up. Pandey likes the cement pack across the board—from UltraTech and Ambuja to smaller names like Sagar Cements and JK Lakshmi.
Autos are another major beneficiary. While two-wheelers are already a penetrated category, four-wheelers are expected to do better. Pandey has been positive on M&M, his top pick, but Maruti also stands to gain significantly since cars remain aspirational and volumes have been muted. In two-wheelers, he prefers Eicher Motors because of its aspirational products, and recent volumes have been strong. So, both two- and four-wheelers should do well.
For CVs, Pandey is not very confident as growth will be challenging, with companies guiding for mid-single-digit growth. So, he is less focused there. But PVs and two-wheelers look much stronger after the GST cut.
Regarding real estate, tax cuts and lower interest rates will start benefiting the sector, but this advantage will largely accrue to tier-II and mid-segment players. The premium segment is already doing well, and much of that upside has been factored in. Pandey does not have a specific view on Godrej Properties, but overall, geography-specific challenges exist. For example, the E-Khata issue in Bangalore or super-premium demand moderating in NCR. So, one needs to be selective.
Pandey likes larger players like DLF, which have a balance between annuity and retail businesses. Max Estates is another name he likes, along with Arvind SmartSpaces. Overall, he is more positive on home-building products than on developers themselves. Price corrections in home-building products have been decent, and things are looking up for them—pipe companies, for example. So, Pandey is relatively more positive on the home-building segment than on the broader real estate sector.
Frequently Asked Questions
What sectors are expected to drive market growth in the second half of the year?
Midcaps, consumption, and cement are expected to drive market growth in the second half of the year, according to Pankaj Pandey, Head Research at ICICIdirect.com.
What triggers are in place for the consumption sector?
Triggers for the consumption sector include GST, the 8th Pay Commission, and tax benefits, which are expected to boost volumes in FMCG and autos.
Which companies in the real estate sector are favored?
DLF and Max Estates are favored in the real estate sector, particularly for their balance between annuity and retail businesses.
How will GST reduction benefit the cement sector?
The GST reduction will result in around a ₹25 decline per 50 kg bag, which is positive for the cement sector, leading to more normalized growth.
What is the outlook for the insurance sector with GST at zero percent?
While GST at zero percent for insurance premiums could lead to margin challenges, the sector is still expected to see better performance in the second half of the year.
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