India's stock markets are experiencing a significant sector rotation, with a renewed focus on consumption-oriented stocks, according to Devang Mehta, Deputy Managing Director and Chief Investment Officer - Equity at Spark Capital Private Wealth. After a prolonged period of stagnation, sectors such as tobacco, alcohol, and broader consumption are gaining attention as they report strong earnings and management commentary. Mehta emphasizes that investors who missed the recent Nifty rally from 22,300 to 24,300 should not panic but instead consider building a portfolio based on three key themes: financialization of savings, capital expenditure, and consumption.

The financialization theme highlights the trend of Indian households moving their savings into financial products, which is expected to drive growth for banks and asset management firms over the next few years. The capital expenditure theme focuses on companies benefiting from India's infrastructure push, while the consumption theme emphasizes growth in the automobile sector, particularly passenger vehicles and two-wheelers. Mehta also notes that private sector banks, such as HDFC Bank, ICICI Bank, and Axis Bank, are well-positioned to outperform public sector banks due to improving fundamentals. Overall, he believes that a two to three-year investment horizon in these themes could yield significant returns.