According to investment managers, India’s vibrant festive sentiment is expected to act as a market catalyst, aligning with record-high retail participation and robust macroeconomic indicators.
E-commerce sales are projected to hit Rs 1.2 lakh crore during the season, marking a 27% year-on-year growth. Unified Payments Interface (UPI) volumes surged past 20 billion transactions in August, and MSME credit demand is expected to rise 35–40% to Rs 3.45 lakh crore.
Investment managers on smallcase highlight that India’s festive economy is gaining significant momentum, and this convergence of festive momentum and structural reforms is prompting a bullish stance on nine high-conviction sectors.
Auto Components
Wright Research, a manager on smallcase, underscores the potential in the auto components space. According to the manager, retail auto sales grew 2.84% YoY in August 2025, led by a 2.18% rise in two-wheelers and 0.93% in passenger vehicles (PVs). Wholesale volumes stood at 3.22 lakh PVs and 18.34 lakh two-wheelers.
Elevated inventory levels of around 56 days signal strong delivery potential for the festive season. Factors such as cooling CPI at 1.69%, above-normal monsoon (+8%), and the Rs 25,938 crore PLI scheme for auto components are expected to ease input costs and improve rural liquidity. The manager also sees stronger aftermarket demand in braking systems, tyres, batteries, and electronics.
Consumption & FMCG
Investment managers including Wright Research, Niveshaay, SmartwealthAI, and WealthTrust Capital observe that festive consumption is entering a robust upcycle. The managers point to a headline CPI of 1.69%, 13.9% FMCG value growth in Q2-CY25, and UPI transactions worth Rs 24.85 lakh crore in August. E-commerce festive sales are estimated at Rs 1.2 lakh crore, with quick commerce contributing an additional Rs 14,000 crore. Rural FMCG consumption is forecast to grow at 14.6% CAGR, reaching $220 billion by year-end.Overall FMCG sales are projected to touch $211–245 billion in 2025, with a 17–27% CAGR runway through 2030. With GST 2.0 reforms reducing taxes and brands passing on price benefits, staples, beauty, and discretionary categories are expected to benefit through Navratri and Diwali 2025.
Gold
SmartwealthAI notes that gold demand during Navratri–Diwali is set for a major surge, backed by cultural and economic drivers. The manager highlights that U.S. federal debt has jumped from $5.7 trillion in 2000 to $35.5 trillion in 2024, contributing to growing central bank interest in gold.
Gold’s share in global reserves has risen to 24%, its highest in 30 years, while the dollar’s share has slipped to 58%. India’s RBI is also accumulating gold, mirroring global trends. The manager sees rising household incomes, festive buying sentiment, and GST-led affordability as contributing factors for potentially record gold purchases this year.
NBFCs
GoalFi sees a credit surge benefiting the NBFC sector this festive season. MSME loan demand is estimated to increase by 35–40% to Rs 3.45 lakh crore, while auto loans are expected to grow 18–19% during the quarter. With overall credit growth forecast at 13–15% in FY25–26 and supported by RBI’s Rs 2.5 lakh crore liquidity infusion via repo and CRR cuts, the manager notes that NBFCs—especially those active in smaller towns—are well-positioned to ride this festive lending wave.
Pharmaceuticals & Healthcare
According to GoalFi, India’s pharma and healthcare sectors are entering a high-growth phase. The manager states that the sector is expected to grow at a 12–14% CAGR from FY25 to FY28. The domestic pharmaceutical market is set to reach $65 billion by FY26, driven by chronic therapies and specialty segments such as oncology and cardiometabolic drugs.
Telemedicine and e-pharmacy services are growing at 25% annually, while exports are projected to reach $35 billion by FY26. Policy support from the PLI scheme and the National Digital Health Mission is boosting the sector’s capacity, while hospital and diagnostics expansion in Tier-2 and Tier-3 cities is accelerating.
Renewable Energy
Niveshaay highlights the renewable energy sector as a key structural play. Solar power generation is up 31% YoY in 2025, and India is aiming for 500 GW of renewable capacity by 2030. EV penetration in the two-wheeler segment is projected to hit 25% by FY30, supported by policies like PM E-DRIVE. Battery Energy Storage Systems (BESS) and grid infrastructure development are also seeing strong momentum. The manager notes that festive sentiment around sustainability aligns with broader clean energy trends.
Capital Markets
WealthTrust Capital notes a continued boom in India’s capital markets. With retail demat accounts at a record 155 million—more than twice the 2020 level—mutual fund SIPs are now averaging Rs 21,000–22,000 crore monthly. The Nifty Financial Services Index has shown an 18% CAGR over the past decade. The manager believes the financialisation of savings is accelerating, supporting equity market liquidity and long-term capital formation.
Infrastructure & Construction Equipment
Kamayakya points to strong government-led capex, with Rs 11.21 lakh crore earmarked for FY26, representing 3.1% of GDP. An additional Rs 1.5 lakh crore has been set aside as interest-free loans for states. GST cuts on cement (from 28% to 18%) may reduce project costs by 3–5%.
Construction equipment (CE) volumes are forecast to grow 2–5% in FY26. The manager notes that festive infrastructure activity and a pickup in private capex are likely to enhance utilisation rates for CE manufacturers and contractors in the second half of FY26.
Defence
Green Portfolio notes that India’s defense sector is seeing heightened activity, with production reaching Rs 1.50 lakh crore in FY25 and exports touching Rs 23,622 crore. The Ministry of Defence has signed 193 procurement contracts worth Rs 2.09 lakh crore, with 92% awarded to domestic companies. The ministry has set a target of Rs 50,000 crore in defense exports by 2029. According to the manager, the sector is in a high-growth phase, driven by Atmanirbhar Bharat and robust order books.
Also read: Ashish Kacholia invested in these 5 IPOs recently. Do you own any?
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
as a Reliable and Trusted News Source