Market Outlook: Structural Shifts in Indian Equities The Indian technology sector is navigating a period of significant volatility as structural concerns over Artificial Intelligence disruption take center stage. The **Nifty IT Index** has faced a correction of approximately **7.5% year-to-date**, with some monthly sell-offs reaching as high as **15%**. Investors are currently reassessing traditional outsourcing models following the introduction of advanced automation tools. **Wipro** recently hit a 52-week low of **209.15**, marking a **30.91%** decline over the past year. **TCS** has also seen its market valuation fluctuate, trading near **2,755** as it pivots toward AI infrastructure collaborations to protect its market share. Banking and Financial Services: The Growth Engine While technology faces headwinds, the domestic financial sector is demonstrating robust resilience. Total bank credit in India recently crossed a historic milestone of **200 lakh crore**, maintaining a year-on-year growth rate of approximately **12%**. The banking sector is benefiting from improved asset quality and a stable credit environment. Non-Banking Financial Companies (NBFCs) are projected to see assets under management grow by **15% to 17%** in the current fiscal year. Retail and MSME lending remain primary drivers, with vehicle finance and affordable housing showing particularly high momentum. Infrastructure and Capital Goods Momentum Government policy continues to provide a massive tailwind for the capital goods and infrastructure segments. The **Union Budget 2026** has earmarked a record **12.2 lakh crore** for public capital expenditure, representing a **9%** increase over the previous year. This sustained spending is fueling the industrial cycle, with the Index of Industrial Production (IIP) for capital goods showing an **8.1%** expansion. These sectors offer high earnings visibility as the "Make in India" initiative drives domestic manufacturing capacity in power equipment, construction, and electronics. Consumption and Auto Sector Recovery Domestic consumption is showing signs of a steady recovery, particularly in rural markets. The automobile industry reported a strong start to 2026, with retail vehicle sales rising **17.6%** year-on-year to reach **2.72 million units** in January. Passenger vehicle volumes are expected to grow between **6% and 8%** this year. This growth is supported by rural income stability and a clear shift in consumer preference toward SUVs and electric vehicles. Tax reforms and easier financing conditions are further stimulating demand across the broader consumption basket. Strategic Sectoral Divergence The current market narrative is defined by a clear divergence. While the IT sector grapples with a valuation reset and AI-driven uncertainty, domestic-facing sectors—Financials, Capital Goods, and Autos—are emerging as preferred allocations. These segments are currently backed by strong internal demand, massive government outlays, and a healthy credit ecosystem.