Sector Outlook: LGT Wealth's Chakri Lokapriya Weighs In on Indian Stock Market
LGT Wealth's Chakri Lokapriya provides a detailed sector-wise analysis of the Indian stock market, covering everything from Financials to Real Estate. Here's what to expect.
Indian Stock MarketSector AnalysisFinancialsReal EstateConsumer StaplesReal Estate NewsAug 24, 2025
Sector-wise Commentary
Communication Services: Telecom operators have reported steady performance, driven by ARPU growth and broadband momentum. However, mobile subscriber additions have slowed. The sector faces risks due to industry balance sheet stress and uneven capacity for capital investment. On the media side, cinema operators have delivered in-line results, with profitability expected to return in the upcoming quarters. However, regulatory risks such as state-level ticket price caps could challenge premium pricing strategies.
Consumer Discretionary: Automotive companies have benefited from premiumization and pricing discipline, although softer volumes and cost pressures have constrained overall margins. Management commentary suggests a positive outlook for two-wheelers, passenger vehicles, and tractors, while commercial vehicles are expected to remain subdued. Policy support, such as potential GST reductions, could stimulate demand. In retail, demand has been weak due to seasonal factors and the impact of early monsoons. The apparel and jewellery segments have managed margin resilience despite slower growth, while value retailers and quick-service restaurants have experienced margin pressures from weaker productivity. Footwear and electronics categories have also seen muted demand. The upcoming festive season may provide a temporary boost.
Consumer Staples: FMCG companies have reported a modest urban recovery alongside relatively stronger rural demand. Sector revenues have risen by around 6% year-over-year, but profitability has contracted due to raw material inventory pressures, leading to margin compression. Earnings downgrades have been more pronounced in the food and personal care categories. Margin pressures are expected to persist through the first half of FY26 but should ease in the second half, supporting stronger earnings growth.
Financials: Banks have delivered modest earnings, with state-owned institutions outperforming peers. Overall loan growth has slowed, and margins have contracted. Asset quality remains broadly stable, but pockets of stress have emerged in MSME and unsecured retail lending. Non-bank lenders have underperformed due to growth and asset-quality concerns. In insurance, life players have posted steady traditional business growth but missed profitability expectations, while non-life players have shown stronger trends. Overall, sector earnings estimates have recently decreased by about 4%, with margins expected to bottom in the second quarter.
Health Care: Pharmaceuticals have seen weaker growth due to pricing pressure in international markets, while domestic formulations have remained stable. Hospitals have continued to deliver strong growth despite drag from new capacity additions, and diagnostics have benefited from wellness testing demand and network expansion.
Industrials: The capital goods segment has had a strong quarter, driven by demand in power and steady international inflows, though private capex has remained subdued. Some sub-sectors have delivered earnings surprises, while others have faced margin pressures. Road construction has been weaker due to low order books and weather disruptions, but the tender pipeline is improving. Electricals have shown mixed results, with strong growth in cables and wires contrasting with subdued performance in other categories.
Information Technology: The sector has had a subdued quarter, with slight revenue contraction despite the seasonally strong period. Mid-tier firms have outperformed larger peers, but cost pressures have weighed on margins. Deal activity has remained healthy, reflecting underlying demand resilience, but management guidance has remained cautious due to limited visibility.
Materials: Steel producers have seen a sequential improvement in profitability per tonne, supported by favorable raw material trends, though falling steel prices in the second quarter are expected to pressure margins. Cement companies have reported robust profitability growth as realizations have strengthened during a seasonally weak quarter. A potential GST reduction could further boost medium-term demand.
Real Estate: The sector has recorded strong year-on-year pre-sales growth, driven by new project launches. However, broader industry data indicate demand moderation in FY26. Market leadership continues to consolidate toward larger, well-capitalized developers.
Utilities: City gas companies have experienced margin pressure due to reduced access to lower-cost domestic gas, though volume growth has partly offset the impact. Power utilities have reported mixed performance, while energy transition investments have supported profitability despite execution challenges.
The author, Chakri Lokapriya, is the CIO Equities of LGT Wealth India. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making investment decisions.
Frequently Asked Questions
What is the current valuation of the Indian stock market?
The Indian stock market is currently trading at 19–20 times FY27 earnings, reflecting elevated valuations.
What are the expected earnings growth rates for FY26 and FY27?
Consensus expectations indicate 6–8% earnings growth in FY26 and a sharper 14–16% in FY27.
What are the key risks for the telecom sector?
Key risks for the telecom sector include industry balance sheet stress and uneven capacity for capital investment.
How has the FMCG sector performed in terms of profitability?
FMCG companies have reported modest urban recovery and relatively stronger rural demand, but profitability has contracted due to raw material inventory pressures.
What is the outlook for the real estate sector?
The real estate sector has recorded strong year-on-year pre-sales growth, driven by new project launches, but demand is expected to moderate in FY26.
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