Beyond currency, Gunwani noted that India lacks a large, index-heavy artificial intelligence (AI) play compared with emerging market peers such as China, Korea and Taiwan, which currently host many of the global AI leaders. The ongoing discussions around a US–India trade agreement have raised India’s perceived risk premium among foreign investors, even though the direct economic impact may be limited.
After five years of outperforming nominal gross domestic product (GDP), large-cap earnings, he says, are likely to mirror nominal GDP growth of around 10–11% over the next three to five years. This suggests limited upside from large-cap stocks compared with earlier cycles.
“We definitely think the small-cap space is very interesting… we are more positive on small-caps today versus one year back,” he said, arguing that the wide universe, ongoing technological shifts and geopolitical changes create scope for differentiated winners. Over a three-to-five-year horizon, he believes small-caps are the asset class most likely to outperform even though tight liquidity can weight on smaller stocks in the near term.
Tight liquidity, he cautioned, can weigh on small-cap performance in the short run. Despite this, Gunwani said timing the macro perfectly is difficult and advocated a gradual increase in exposure. Reflecting this approach, he stated that his fund has been reducing cash levels, which were as high as 14–15% six months ago, as valuations in parts of the small-cap universe have turned more attractive.Gunwani said this stance puts him at odds with some peers who have been increasing allocations to large-cap stocks for capital preservation. His focus, he said, remains on long-term capital appreciation, highlighting that several small-cap stocks have the potential to double over the next three to five years.
On sectoral preferences, Gunwani pointed to global cyclicals, such as metals and shipping, as particularly attractive, citing resilient growth in the US and signs of recovery in China following a prolonged downturn in the property sector. He also sees value in lenders trading at or below a price-to-book value of one, supported by strong household balance sheets and a low probability of major asset-quality issues.
Within the metals industry, Gunwani differentiated between segments. He described gold finance as “a bit expensive” at current levels but said industrial metals remain interesting. Non-ferrous metals, he stated, are supported by resilience in the US, recovery in Europe and China, and increased global capex driven by protectionist policies. Ferrous metals, particularly steel, are more dependent on China’s policy choices and could become a play on a strengthening yuan against the US dollar.
Bandhan AMC managed assets worth ₹609.27 crore as of December 31, 2025.
For the entire interview, watch the accompanying video
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