Why Deepak Shenoy is betting big on these 3 sectors and what he is avoiding
Many investors feel worried about the stock market. Headlines often talk about global risks and economic slowdown. But Deepak Shenoy, the founder of Capitalmind Mutual Fund, sees a different picture. He believes the ground reality is much better than what the news suggests. He points to strong corporate earnings and rising bank credit growth as signs of a healthy economy. Based on this, he is placing big bets on three specific sectors. At the same time, he is staying away from some popular themes.
Three sectors where Shenoy sees strong opportunity
Shenoy is most excited about industrials, import substitution, and manufacturing. These three areas are closely connected. He believes they will benefit from a long-term shift in the Indian economy. The government is pushing for more local production. Companies are also moving away from relying on foreign supplies. This creates a strong tailwind for domestic businesses.
Within industrials, Shenoy likes companies that make machinery, equipment, and components. These firms supply to factories, infrastructure projects, and power plants. As India builds more roads, bridges, and factories, demand for their products will rise. He expects this trend to continue for several years.
Import substitution is another key theme. This means replacing goods that India currently buys from other countries with locally made products. For example, India imports a lot of electronics, chemicals, and specialty metals. Local companies that can make these items will gain market share. Shenoy believes this is a powerful and underappreciated opportunity.
Manufacturing as a whole is also getting a boost. The government’s production-linked incentive (PLI) schemes are helping many sectors. From mobile phones to pharmaceuticals, Indian factories are expanding. Shenoy thinks this will lead to higher profits for manufacturing companies over time.
High-conviction bets on defence and semiconductors
Within these sectors, Shenoy has two very specific high-conviction bets. The first is defence. India is spending more on its military. The government also wants to buy more weapons from domestic companies. This is good news for Indian defence manufacturers. They are winning large orders and building long-term revenue streams. Shenoy sees this as a multi-year growth story.
The second high-conviction bet is semiconductors. These tiny chips are essential for everything from cars to smartphones. India is trying to build its own semiconductor industry. The government is offering big incentives to attract companies. Shenoy believes that early movers in this space could become very valuable. He is willing to take a calculated risk on this emerging theme.
What Shenoy is avoiding and why
While Shenoy is bullish on many areas, he is cautious about two things. The first is oil prices. He warns that rising oil prices can hurt the Indian economy. India imports most of its oil. Higher prices increase costs for companies and consumers. This can reduce profits and slow down growth. Shenoy advises investors to be careful with sectors that are sensitive to oil prices, such as airlines and paint companies.
The second theme he is avoiding is electric vehicles (EVs). Many investors are excited about EVs. But Shenoy thinks the technology is still evolving. There are many uncertainties. Battery costs are high. Charging infrastructure is limited. Consumer adoption is slow. He believes it is too early to bet big on EV companies. He prefers to wait until the technology and business models are more mature.
What this means for regular investors
Shenoy’s views offer a clear roadmap for investors. He is focusing on areas with strong government support and long-term demand. Industrials, import substitution, and manufacturing are backed by policy changes. Defence and semiconductors have high growth potential. At the same time, he is avoiding risky themes like oil-sensitive sectors and early-stage EV technology.
Regular investors can learn from this approach. It is important to look beyond negative headlines. Strong earnings and credit growth are positive signs. But it is also wise to avoid sectors with too much uncertainty. By focusing on clear, long-term trends, investors can build a portfolio that is both safe and rewarding.
