Bajaj Alts CIO identifies manufacturing and defence as India’s next growth engines
Jitendra Gohil, chief investment officer at Bajaj Alts, outlines a structural shift in Indian equities toward manufacturing and defence, warning that foreign investor returns hinge on a US trade deal.
Indian equities are poised for a structural shift toward manufacturing and defence, according to Jitendra Gohil, chief investment officer of listed equities at Bajaj Alts. Following a decline in the first half of 2026, the market is stabilizing, with the domestic macroeconomic setup for the second half appearing positive.
Gohil identifies electronics manufacturing, solar energy, power equipment, batteries, and waste management as being in the early stages of a robust growth cycle. Defence, shipbuilding, infrastructure, and aerospace also present significant opportunities, though he warns that valuations in these areas remain demanding.
A decisive return of foreign portfolio investment hinges on the successful conclusion of a trade deal with the United States. Gohil notes that recent US policies toward India have been harsh, restrictive, and unpredictable, citing concerns over Russian oil purchases, tariffs, and immigration.
While Indian equity valuations are rich, Gohil argues this is justified by the country’s high return on equity, strong corporate balance sheets, and consistent low- to mid-double-digit earnings growth. However, he remains cautious on near-term profit growth, as rising private capital expenditure could trigger margin pressure and weaker cash flows.
Addressing concerns over rising household debt, which has climbed to 48 percent of gross domestic product from 35 percent a decade ago, Gohil sees no systemic risk. He points out that India’s ratio remains well below peers like South Korea at 89 percent and China at 58 percent, while banking non-performing assets sit near multi-decade lows.
This leverage is structurally driven by urbanization, a declining total fertility rate of 1.9, and a demographic where 65 percent of the population is under 35. Furthermore, a wealth effect from rising gold and equity prices has fueled borrowing, with gold loans outstanding at nearly 18 to 19 trillion rupees, representing about 5 percent of GDP.
Looking ahead, Gohil characterizes the current environment as a stock picker’s market rather than one driven by broad valuation re-rating. He anticipates that once foreign capital returns, liquidity may temporarily rotate from expensive mid- and small-cap stocks into undervalued large-cap private banks and information technology firms.
He maintains that India’s price-to-earnings premium over other emerging markets is warranted given its diversified long-term growth story. This contrasts with extreme wealth concentration in the US, stagnant population growth in Europe, and weak domestic consumption in China.
