**Market Brief: Selective Growth in Cyclical & State-Run Sectors** The Indian equity market continues to show a sharp divergence, with structural growth themes outperforming broader indices. While global uncertainty and tariff concerns remain, selective opportunities in **Railways, Defence, and PSU Banks** are attracting significant long-term capital due to record order books and improving return ratios. **PSU Banks: The ₹2 Lakh Crore Milestone** State-owned lenders are witnessing a historic rally fueled by a fundamental shift in asset quality and record earnings. * The **Nifty PSU Bank Index** hit a record high of **9,796.90** this week, gaining nearly **12%** in the last month alone. * Combined profits for PSU banks are projected to cross the **₹2,00,000 crore** mark for **FY26**. * **State Bank of India (SBI)** briefly crossed a **₹12 lakh crore** market cap, posting a record quarterly net profit of **₹21,028 crore**, a **24%** year-on-year increase. * Average Net NPAs across the sector have reached multi-year lows, supported by a healthy credit growth rate of **12%**. **Railways: A Multi-Year Capex Pipeline** The railway sector is transitioning from a "recovery" phase to a "structural growth" cycle, backed by massive government allocations. * The **Union Budget 2026** has allocated an estimated **₹2.75 to ₹2.8 trillion** for railway capital expenditure. * **Rail Vikas Nigam Limited (RVNL)** holds a staggering order book of **₹87,000 crore**, ensuring revenue visibility for the next three years. * The focus has shifted toward high-speed rolling stock and the **Kavach 4.0** safety mandate, benefiting manufacturers and infrastructure developers alike. * **Indian Railway Finance Corporation (IRFC)** is diversifying its portfolio, recently signing a major lease agreement with **NTPC** to fund power sector projects. **Defence: Indigenisation Driving Returns** Defence stocks have emerged as the top performers of early **2026**, with several names delivering returns between **30% and 68%** over the past year. * The **Ministry of Defence** is seeking a **20%** increase in the capital acquisition budget for **FY27**, the steepest single-year jump. * **Bharat Electronics Ltd (BEL)** and **Hindustan Aeronautics Ltd (HAL)** are primary beneficiaries of a **₹1.85 to ₹2.1 lakh crore** estimated capital pool for military modernization. * The domestic procurement threshold has crossed **65%**, reducing reliance on imports and creating a captive market for local firms. * Export targets remain ambitious, aiming for **₹50,000 crore** by **2028-29**, which is already reflected in the growing international orders for private players like **Solar Industries**. **Strategic Outlook** Market sentiment remains cautious toward the IT sector due to global shifts, leading to a rotation into domestic cyclical plays. Investors are prioritizing "execution over narrative," favoring companies with low debt and high dividend potential. Although short-term volatility persists, the visibility of government-backed contracts provides a strong cushion for those focused on the medium-to-long term.