Pritam Deuskar on AI, Defence & 2026 Market Outlook
The Wealthyvia Newsletter
On altitude and instruments: valuation in a momentum age, the true moats of the intelligence race, and the decade of metal now dawning between Europe and India.
Markets after the storm: expensive, exuberant, and quietly changing regime
Thirty years at this desk — through Harshad Mehta's Bombay, the Asian crisis, the dot-com fever, Lehman, the taper tantrum, the pandemic, and now the intelligence boom — have taught me one discipline above all: separate the weather from the climate. The weather this quarter is a relief rally. The ceasefire in West Asia has held; the Strait has reopened to convoyed traffic; crude has retreated from its panic highs; and equities have staged the kind of V-shaped recovery that persuades the impatient that risk itself was an illusion. The climate, however, is something else entirely — and it is the climate that compounds.
Consider the instrument panel. The world's largest equity market trades near 20x forward earnings—a level that has historically produced only modest long-term returns. Gold, after a historic rally, is no longer a contrarian hedge but a consensus trade. According to Mr. Pritam Deuskar, the next phase of wealth creation will be driven by earnings compounding rather than liquidity-driven multiple expansion. Central banks are pivoting from restrictive to forward-looking policies, broad money growth is re-accelerating, and inflation concerns are gradually giving way to growth. This marks the first meaningful shift in the global liquidity cycle since 2021.
Yet liquidity, like monsoon water, is only useful where it lands. And here is the nuance most commentary misses: 2026 is the year the primary market opens its mouth. The listing of the era's defining space enterprise, and the queue behind it — a national exchange, a telecom-and-digital colossus, hospitality platforms and a dozen more — represent, by our estimate, well over $100 billion of combined issuance seeking a home. Veterans of Indian markets will remember January 2008, when a single power IPO absorbed the subcontinent's speculative liquidity days before the peak; or 2021, when a fintech listing marked the exhaustion of that cycle's appetite. Mega-IPOs are not merely opportunities. They are liquidity events for the whole market — a siphon on secondary valuations, a census of true demand, and historically, a bell that rings near tops for the frothiest quartile even as it funds the next decade's champions.
“Liquidity is the tide; valuation is the depth of your keel. The sailor who confuses the two runs aground precisely when the water looks highest.”
— FROM PRITAM DEUSKAR, CIO
Two structural currents deserve your attention beneath the surface chop. First, energy: a decade of under-investment in upstream oil — exploration capex still runs some forty percent below its 2014 peak in real terms — has met a geopolitical reminder that supply is a privilege, not a birth right. Depleting legacy fields and a security premium argue for structurally firmer energy prices, which in turn keep the inflation floor higher and the case for real assets intact. Second, the great re-industrialisation: Europe has committed to the largest rearmament since 1949 — a NATO pledge moving toward five percent of GDP, an EU readiness programme mobilising on the order of €800 billion, a German fiscal revolution exempting defence from the debt brake alongside a €500 billion infrastructure fund. Europe has the money and the mandate; what it lacks is hands, factories, and cost curves. India has all three, plus a government willing to underwrite the marriage — through production-linked incentives, liberalised FDI in defence, offset frameworks, and treaty-level engagement with France, Germany, and the United Kingdom spanning fighters, engines, submarines, and precision components. Franco-Indian naval aviation agreements alone approach €7 billion; combined announced deal flow across these corridors, by our tally, now runs into the tens of billions. We have spent years building positions and relationships precisely at this intersection — global defence primes, European precision houses, and the emerging Indian supply chain that will serve them both — and we believe our portfolio sits where the current is strongest.
LEAF II / IV — DISCIPLINE, THE TELESCOPE, AND THE MICROSCOPE
Three arguments about price, and one about power
1. Valuation discipline amidst the momentum chase
Momentum is the most seductive of all factors because it pays you to abandon judgment. Index flows amplify it: capital allocated by market-weight buys more of whatever has already risen, converting passive investing into an unacknowledged momentum strategy. The discipline we practise is not the refusal to own great companies at optically high multiples — that error cost investors the finest compounders of the last thirty years. It is the refusal to let price action substitute for a valuation case. Before every purchase we ask a question the crowd rarely does: at this price, what must be true? If the answer requires a decade of flawless execution merely to earn a bond-like return, we pass, however magnificent the story. The Nifty Fifty investor of 1972 owned genuinely superb businesses and still waited a decade to break even — not because he misjudged the companies, but because he misjudged what he paid. Quality is a fact; value is a price. Confusing the two is the most expensive mistake in investing, and it is being made at scale today.
2. AI through the telescope and the microscope
Through the telescope, the intelligence build-out is the largest peacetime capital deployment in history — hundreds of billions of dollars a year into compute, power, and data centres, with adoption curves steeper than the internet, the PC, or electricity before it. Machines now write meaningful fractions of the world's code and have begun contributing to their own improvement. This is not a fad; it is a general-purpose technology, and general-purpose technologies reorder profit pools for fifty years. Through the microscope, however, one sees the fine grain the telescope hides: depreciation schedules on chips that obsolesce in three years; power and memory as the true bottlenecks; revenue models still immature relative to the capital consumed; and an emerging casualty list — capital-light software moats, once thought eternal, being questioned by the very intelligence they helped train. Both lenses are correct. The railway mania of the 1840s and the fibre boom of 1999 each transformed civilisation and incinerated the majority of the capital invested — while minting a handful of dynasties. Our task is not to vote on the technology. It is to locate the scarce, defensible layers — power, precision components, chokepoint manufacturing, distribution — where the economics survive the euphoria.
3. When the ability to fund the race becomes the moat
Here we must engage honestly with the strongest counterargument of our era. The classical capital-cycle framework teaches that torrents of capital inevitably compress returns by creating excess supply. Applied crudely to AI, it suggests caution. Yet today's intelligence build-out presents a different dynamic. As capital requirements rise into tens of billions of dollars, the ability to finance, scale, and sustain investment itself becomes a durable competitive advantage. As Mr. Pritam Deuskar observes, the defining moat of this cycle is no longer technology alone, but the ability to deploy capital at scale with discipline and conviction. Only a handful of global leaders possess that capability, making this cycle fundamentally different from previous technology booms.
Both frameworks contain their own demerits. The capital-cycle purist would have exited the great platform monopolies fifteen years too early, mistaking the largest value creation of the age for a passing capex binge — the framework under-weights increasing returns to scale, network effects, and the possibility that one buyer of capacity captures the entire industry's profit pool. The funding-as-moat enthusiast, conversely, forgets that the 1840s railway promoters and the 1999 fibre barons made the identical argument — “no one else can afford these rights of way” — before overcapacity arrived from unexpected directions. Our synthesis: winner-takes-most can be true for two or three entities while the capital cycle simultaneously destroys returns for the twenty others funding the same race. We therefore own the race selectively at the layers of genuine scarcity, size positions so that no single outcome can wound us, and keep the discipline of asking what price already assumes victory.
“A moat was once dug with brands and patents. Today it is poured in concrete, wired in copper, and measured in gigawatts. The question is no longer who is clever — it is who can afford to keep playing.”
— FROM PRITAM DEUSKAR, CIO
LEAF III / IV — THE DECADE OF METAL AND MANDATE
Defence and precision aerospace: the opportunity of the next decade
Every generation is granted one sector where policy, capital, technology, and necessity converge for twenty years. In the 1990s it was software services; in the 2000s, commodities and Chinese infrastructure; in the 2010s, the platform economy. We submit that for the coming decade it is defence and precision aerospace — and that its geography runs, unmistakably, through India.
The arithmetic is stark. Global defence spending has crossed $2.7 trillion and is climbing at its fastest clip since the Cold War. Europe's commitments alone imply an incremental $300–400 billion of annual spending by the early 2030s versus the last decade's baseline. Order books tell the story before income statements do — and this is the metric we have watched through every budget expansion and contraction cycle since the early nineties: leading European land-systems houses now carry backlogs exceeding €60 billion, five to six times annual revenue; the two-great civil airframers hold a combined backlog above 14,000 aircraft — roughly a decade of production sold before a single rivet is driven. In this industry, the backlog is tomorrow's revenue with a signature on it; the ratio of order intake to sales — the book-to-bill — is the truest leading indicator we know, and it has run above 1.5 across the Western complex for three consecutive years. When book-to-bill stays elevated that long, capacity — not demand — becomes the binding constraint. And capacity is precisely what India supplies.
2016 figures per SIPRI Military Expenditure Database; 2026E per announced national budgets, NATO submissions and our estimates at current US$. Germany includes special-fund outlays; Poland ~4.7% of GDP — NATO's highest share.
Why India is destined to do wonders here
Three forces compound. First, the domestic engine: India's defence budget now approaches $80 billion; indigenous defence production has climbed to roughly $17 billion annually, nearly tripling in a decade; defence exports have grown from a rounding error to approximately $2.8 billion, with an official ambition of $6 billion by decade's end. Second, the European migration: confronted with decade-long domestic queues, labour scarcity, and cost curves, European primes are doing what American primes did with Japanese and Korean suppliers in the 1980s — transferring work packages, then technology, then design authority. Final assembly lines for military transport aircraft now stand on Indian soil; fighter fuselages, aerostructures, engine components for the world's best-selling narrow-body engine, and naval systems are machined in Indian plants; the major airframers each source over a billion dollars annually from hundreds of Indian suppliers, with stated ambitions to multiply that. Technology-transfer agreements — including fighter-engine manufacture at transfer levels once thought unthinkable — convert purchase orders into industrial capability, and industrial capability into an ecosystem. Third, the moat that cannot be bought quickly: certification. In aerospace, a part is not a product until it is a certified part — AS9100, NADCAP, airworthiness authority sign-off, five-to-seven-year qualification cycles on a single forging or actuator. This is the priesthood of precision: slow to enter, nearly impossible to dislodge. Every year an Indian supplier spends inside a prime's certified vendor list is a year no competitor can compress.
Compiled from ministry disclosures (indigenous production ~$17bn FY25), civil aviation and MRO estimates; 2026E ours. Official target: $70bn by 2030.
We have seen this story before. Taiwan spent two decades building semiconductor capabilities before the world recognised the strategic value of its manufacturing ecosystem. Precision manufacturing follows the same pattern—years of investment, capability building, certifications, and supply-chain integration before the economic rewards become fully visible. As Mr. Pritam Deuskar observes, India's defence and precision aerospace ecosystem is entering the value-capture phase, where years of patient investment are beginning to translate into sustained earnings growth and global market share gains. India signed this covenant nearly eight years ago; the compounding phase is now unfolding. By 2035, what appears today as a long-term opportunity may simply be recognised as one of India's defining industrial transformations.
LEAF IV / IV — THE EVIDENCE IN TWO PICTURES
Follow the committed capital
Announcements can be theatre; committed capital is testimony. The two exhibits below trace our estimates of annual MNC investment and sourcing commitments flowing into India's aerospace, precision manufacturing, and defence ecosystem. The evidence is unmistakable: capital has accelerated sharply since 2021, reflecting a structural rather than cyclical shift. As per Mr. Pritam Deuskar, sustained capital commitments—not headlines—are the clearest indicator of where long-term wealth creation is likely to emerge. Corporations diversify supply chains cautiously, but once strategic capital is committed, those decisions are rarely reversed.
EXHIBIT I — MNC CAPITAL INTO INDIAN AEROSPACE & PRECISION MANUFACTURING
Estimated annual investment + sourcing commitments, US$ billion, 2016–2025
Estimates compiled by this office from announced facility investments, JV commitments and disclosed annual sourcing programmes of global aerospace majors and their tier-1 suppliers; figures are indicative of direction and order of magnitude, not audited totals.
EXHIBIT II — MNC CAPITAL INTO INDIAN DEFENCE MANUFACTURING
Estimated annual investment + JV / technology-transfer-linked commitments, US$ billion, 2016–2025
Estimates compiled by this office from announced JV capitalisations, offset-linked investments and technology-transfer programme values attributable to foreign primes; indicative of direction and order of magnitude, not audited totals.
How we are positioned, and a closing thought
We hold, with sized conviction rather than borrowed courage: the scarce layers of the intelligence build-out where certification, power, and precision constrain supply; the European and allied defence complex where five-times backlogs convert mandate into decade-long revenue; the Indian precision and defence supply chain at the point of its inflection; energy and gold as the ballast of a re-inflating, re-arming world; and cash enough to be the buyer when this year's magnificent IPO calendar tests the market's true depth. We will look wrong for quarters at a time. That is the tuition compounding charges.
“The market pays most handsomely not for knowing the future, but for having already done the boring work the future will require. Certification, capacity, and patience cannot be bought in a hurry — which is exactly why they compound.”
— FROM PRITAM DEUSKAR, CIO
With gratitude for your patience, which is our true capital,
Pritam Deuskar
Chief Investment Officer
WEALTHYVIA VENTURES LLP · MUMBAI
This letter is illustrative commentary prepared for discussion. Figures marked as estimates are directional compilations from public announcements and disclosures, not audited data; market statistics are approximate as of June 2026 and subject to revision. Nothing herein constitutes investment advice, an offer, or a solicitation. Past performance — of markets, sectors, or nations — is no guarantee of future results. Readers should verify all data independently and consult their own advisers before acting.