Defence outlook strong, but PSU margin concerns keep investors selective: Manish Gunwani

Manish Gunwani, Head – Equity at Bandhan AMC, said sustained crude oil prices above $90 per barrel could weigh on India’s macroeconomic stability and limit gains in domestic stocks. He also said the global AI investment boom is drawing capital away from India toward markets such as Taiwan and South Korea.

Manish Gunwani, Head of Equity at Bandhan AMC, which manages assets worth ₹962 crore, warned investors against becoming too comfortable with the current market rally.

“We should not be too complacent,” he said, adding that if oil prices remain elevated for another few months, India’s fiscal and current account situation could come under stress.

Among sectoral bets, Gunwani remains positive on defence for the long term but says investors are increasingly looking beyond large public sector companies due to concerns over margins, execution and government pricing pressure.

Niche companies linked to defence, aerospace, oil and gas and engineering services are gaining investor attention amid a broader global capital expenditure cycle.

“I think some of the smaller names which cater to a mix of defence, oil and gas are very interesting plays to look at,” he said.

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In other sectors, he said, “If it [crude] remains above 90, I don't see too much upside on the domestic stocks like banks, autos, etc,” he said.

He also pointed to the growing global interest in artificial intelligence-related investments as a challenge for Indian equities in attracting foreign capital. According to Gunwani, investors are allocating more money to AI-linked markets and sectors including semiconductor companies, data centres, electrification and commodities.

“The competition for capital for India is very strong at this point of time,” he said.

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Gunwani is constructive on manufacturing exporters, particularly companies in pharma, engineering and auto ancillaries.

“We are basically looking at manufacturing exporters,” he said, adding that India could see policy support and currency-related tailwinds if IT services growth slows down.

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Gunwani also expects governments globally to focus more on energy security following disruptions caused by the Ukraine and Iran conflicts. He believes countries may increase investments across coal, nuclear, refining and energy infrastructure to avoid supply chain disruptions.