India's Next Big Themes: AI, Semiconductors & Defense to Lead Wealth Creation: Manish Jain

Time of India

16 hours ago

In this edition of ETMarkets Smart Talk, Manish Jain, Chief Strategy Officer & Director at Mirae Asset Capital Markets, shares his insights on the emerging megatrends that are set to reshape India's investment landscape over the next decade.
From artificial intelligence and semiconductors to
defense
and renewables, Jain believes these sectors hold the key to long-term
wealth creation
.
He also delves into the current market volatility, the evolving IPO landscape, and why India is poised for a multi-year growth story driven by innovation, digital transformation, and strategic modernization. Edited Excerpt -
Q) What is fuelling volatility on D-Street – are tariff war fears still playing spoilsport?
A) Last week, during our Invest India Global Conference in Mumbai, I mentioned that tariff war-related fears will not be the main driver of volatility going forward. On tariffs, the world is now tuned for sudden news and adjustments thereof.
A 10% tariff tax is universal to other countries as well. The impact of the tariff war on India's GDP is limited. The impact on markets is more sentimental and news-driven.
FY26 consensus GDP is projected to grow at around 6.5%, which is expected to be better than last year's print of 6.3%. Bilaterally, India is at an advanced stage of discussion with the US and the UK. India is also negotiating with the EU and New Zealand.
Earnings seem to have bottomed out. Now, any earnings shock could be a factor for volatility. Geopolitics has become very complex. This could drive volatility. COVID could be another reason for increased volatility going forward.
Q) How are you managing volatility in your portfolio? Have you made any recent tweaks?
A) Gold is part of the portfolio. I have increased the allocation. Cash levels vary, but I try to keep cash at around 10% to take advantage of any opportunities that volatility may present.
US stocks and
ETFs
(including Bitcoin ETF) are part of the portfolio. I'm also evaluating UAE markets to see if they present good yields on bonds and REITs.
Q) What are your thoughts on the March quarter results from India Inc.? Any notable winners or laggards?
A) For 478 companies in the Nifty 500, Revenue/EBITDA/PAT grew by 6%/11%/12% YoY. Ex-financials, growth was 6%/9%/15% YoY. EBITDA/PAT margins improved by 120/60 bps to 23.8%/10.5%.
The highest earnings growth was observed in Metals,
PSU Banks
, Healthcare, Telecom, Internet Services, Chemicals, Transportation, and
Capital Goods
. Earnings were dragged by Oil & Gas (ex-OMCs), Private Banks, and
Infrastructure
.
Q) We're seeing increased activity in the IPO market. What's your take on the companies getting listed – any names that look interesting?
A) It's difficult to talk about specific names. Any business with a cash-generating ability would be on the radar. Sustainable EPS growth and growing market share would be the criteria for selecting IPO companies from the lot.
Q) The SME space has seen more interest in 2025 compared to mainboard IPOs. Do you think there's froth building in this space or do you see it as a long-term opportunity?
A) On a selective basis, I see it as a long-term opportunity. Sometimes, we have seen mainboard activity reduce, but SME IPOs have still gone through.
We have more bankers coming in to place SME IPOs, and this is a space that has grown tremendously, even though there is less liquidity and a much higher application size.
For a good issue, even for a smaller fund raise, there is enough and more liquidity to fill these IPOs.
Q) Where do you currently see value in the market for long-term investors?
A) A lot is happening in India in the next 5–7 years. So many things are doubling, including GDP.
I would keep an eye on 4–5 sectors:
1. AI
– India's AI market is projected to grow at a CAGR of 25–35%. It's expected to raise India's annual growth rate by 1.3% and add a trillion dollars to the economy in the next 10 years.
2. Defense –
Our defense budget is USD 75 billion, ranked 4th highest globally. We have a target of USD 6 billion in exports and USD 35 billion in production in the next 5 years.
3.
Digital Economy
– In the next 5 years, India's DE is projected to contribute nearly one-fifth or 20% of the country's overall economy. DE industries have grown at 17% vs the economy's 12% growth rate—outpacing traditional sectors.
4. Semiconductors –
Wafers and chips—not from potatoes but from silicon. The semiconductor market is expected to double to USD 100 billion in the next 5 years.
5. Renewables –
India is targeting 500–600 GW of RE in the next 5–7 years. Green hydrogen is something to keep an eye on. India is targeting 5 million tonnes per year in the next 5 years.
Q) What's your outlook on the defense sector? Several stocks witnessed a double-digit rally following recent geopolitical tensions between India and Pakistan.
A) In the recent conflict between India and Pakistan, assets and weapons used by the armed forces were mostly made indigenously with limited foreign content.
These have delivered the desired outcomes and successfully demonstrated capabilities at par with global standards.
For defense products, proven capabilities of the equipment are a major deciding factor while acquiring the assets. Following the conflict, Indian defense equipment is now in high demand, and enquiries have also increased from various countries.
The recent rally in the defense sector was backed by expectations of new defense orders under emergency procurement. The development of new-age weapons is also expected to see strong growth over the next 1–3 years.
The government is expected to announce the process to fast-track the acquisition programme. In the longer term, the modernisation programme will pick up speed.
Next year's defense budget may see an increase in the allocation of funds towards modernisation, acquisition of assets, IAF fleet strength, etc.