10 Sectors That Could Generate Alpha Over the Next 5–10 Years, According to Right Horizons PMS Founder Anil Rego

10 Sectors That Could Generate Alpha Over the Next 5–10 Years, According to Right Horizons PMS Founder

Despite ongoing geopolitical tensions, global tariff concerns, and market volatility, Anil Rego, Founder of Right Horizons PMS, believes India's long-term investment story remains strong.

According to Rego, investors should focus on quality businesses with sustainable earnings growth rather than reacting to short-term market noise. He expects Nifty earnings to grow at nearly 12% CAGR during FY26–FY28, supported by strong domestic demand and healthy corporate fundamentals.

Smart Money Is Rotating, Not Exiting

Rather than moving away from equities, institutional investors are becoming increasingly selective.

According to Rego

• Capital is flowing into businesses with strong earnings visibility.
• Companies with healthy balance sheets continue to attract investors.
• Domestic growth-oriented sectors remain preferred.
• FIIs are expanding beyond benchmark stocks into quality mid- and small-cap companies.

Should Investors Reduce Equity Exposure?

Rego does not believe investors should reduce equity allocation solely because of current market uncertainty.

Instead, he suggests

• Maintain long-term discipline.
• Stay diversified.
• Consider accumulating quality businesses during periods of volatility.
• Align asset allocation with financial goals and risk appetite.

Top 10 Sectors That Could Generate Alpha

1. Manufacturing

India's manufacturing sector continues to benefit from

• Make in India initiative
• Production Linked Incentive (PLI) schemes
• China+1 strategy
• Rising exports
• Infrastructure spending

Manufacturing is expected to remain one of India's strongest structural growth stories.

2. Electronics Manufacturing Services (EMS)

Rego expects rapid expansion in India's EMS industry due to

• Rising electronics demand
• Export opportunities
• Global outsourcing
• Increasing value addition

The sector offers strong long-term growth potential.

3. Financial Services & Wealth Management

Key growth drivers include

• Rising SIP investments
• Growing HNI population
• Increasing financialisation of savings
• Greater demand for professional wealth management

Only a small percentage of India's wealth is professionally managed, leaving significant room for expansion.

4. Healthcare

Healthcare continues to benefit from

• Growing insurance penetration
• Ageing population
• Rising healthcare spending
• Infrastructure expansion

The sector is expected to deliver consistent long-term growth.

5. Renewable Energy & Power

India's transition toward clean energy creates opportunities across

• Solar
• Wind
• Transmission
• Energy storage
• Power infrastructure

Increasing electricity demand further strengthens the outlook.

6. Consumer Discretionary

Higher disposable income and premium consumption trends continue supporting

• Retail
• Consumer brands
• Lifestyle products
• Organised retail

Urbanisation is expected to remain a major growth catalyst.

7. Defence & Aerospace

India's defence sector continues to benefit from

• Record defence exports
• Higher defence spending
• Government indigenisation initiatives
• Drone technology
• AI-enabled defence systems
• Electronic warfare

The sector offers long-term structural opportunities.

8. Semiconductors

India is building a complete semiconductor ecosystem including

• Chip design
• Fabrication
• Packaging
• Testing

Government incentives and global supply-chain diversification could support significant future growth.

9. Real Estate

Long-term drivers include

• Urbanisation
• Premium housing demand
• Commercial real estate
• Warehousing
• Data centres

Industry consolidation is also strengthening organised developers.

10. Capital Markets

India's financial markets continue expanding through

• Rising retail participation
• Record SIP inflows
• Growing AUM
• Financialisation of household savings

This creates opportunities across exchanges, depositories and asset management businesses.

Major Risks Investors Should Monitor

While remaining optimistic, Rego highlighted several important risks

• Global tariffs
• Geopolitical tensions
• Inflation
• Interest rate policy
• Crude oil prices
• Currency volatility
• Corporate earnings slowdown
• Weak domestic consumption

He advises investors to remain diversified and focus on companies with strong fundamentals rather than reacting to headlines.

Key Takeaways

• Nifty earnings could grow around 12% CAGR during FY26–FY28.
• Smart money is rotating into quality businesses.
• India remains supported by strong domestic demand.
• Long-term structural themes remain intact.
• Manufacturing, EMS, Defence, Healthcare and Semiconductors are among the most promising sectors.
• Market volatility could present buying opportunities for long-term investors.

What Investors Should Watch

Investors should continue monitoring

• Corporate earnings growth
• Government policy reforms
• Capital expenditure trends
• Domestic consumption
• Global interest rates
• Inflation
• Crude oil prices
• Geopolitical developments
• FII investment trends
• Long-term structural growth sectors

Final Thoughts

According to Right Horizons PMS Founder Anil Rego, India's long-term investment story remains strong despite near-term market uncertainties. Rather than reacting to short-term volatility, investors should focus on businesses with sustainable earnings growth and structural advantages.

With expectations of healthy earnings growth and continued domestic expansion, sectors such as Manufacturing, EMS, Financial Services, Healthcare, Renewable Energy, Defence, Semiconductors, Real Estate, Consumer Discretionary, and Capital Markets could offer attractive long-term opportunities for wealth creation.

Question for Investors

Which sector are you most bullish on for the next 5–10 years?

• Manufacturing
• Defence
• Semiconductors
• Healthcare
• Renewable Energy
• Financial Services
• Capital Markets

Share your views in the comments.

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Disclaimer

This article is published solely for educational and informational purposes and should not be considered investment advice, financial advice, or a recommendation to buy, sell, or hold any security. The views discussed are those attributed to Anil Rego, Founder of Right Horizons PMS, as reported in the source material. TrendRipperX is not registered with SEBI as an Investment Adviser or Research Analyst. Investors should conduct their own research and consult a SEBI-registered financial advisor before making any investment decisions.