Daily Voice: AI hype, fragile US growth, FII caution, and why metals may still shine in 2026

Jimeet Modi is the Founder and CEO of SAMCO Group

Jimeet Modi, the Founder and CEO of SAMCO Group believes metals represent a significant opportunity as the global economy enters 2026.

"The sector is undergoing a structural transformation, shifting from cyclical commodities to critical strategic assets. The alignment of AI infrastructure, green energy transition, massive grid modernisations and government measures to protect the domestic industry has created a unique demand floor," he said in an interview to Moneycontrol.

With supply deficits emerging in key base metals and stabilized input costs, the metals industry is positioned for substantial value creation and sustained profitability throughout the entirety of the upcoming fiscal year, he said.

Do you expect any significant global challenges for Indian equities in 2026?

US recorded its highest unemployment rate of 4.6% in the last 4 years in the month of November. On the other hand, the US GDP grew by a healthy 4.3% for the quarter ending in September. US economy has expanded but it didn’t add many jobs. This is a fragile environment of growth which can lead to recessions going forward.

If the AI related productivity gains materialise then unemployment could shoot up and if it doesn’t, then companies who have pumped in billions of dollars for AI capex will have to take major write offs. This is the fine balancing act that the global markets will have to walk on in 2026. Developments around these changes will pose challenges not only for Indian equities but for the entire emerging markets.

Do you expect a strong Q3 FY26 earnings season?

Q3 FY26 earnings are expected to be resilient, especially in sectors benefiting from GST rationalisation and festive-season demand. Cyclical pockets like hotels, travel, and discretionary consumption tend to see operating leverage during this period.

Do you expect the government to announce additional measures in the Union Budget to sustain strong economic growth in the coming years despite global challenges?

The government's focus has changed after the General Elections in 2024. Before the elections government's focus was on capital expenditure. The government front-loaded a lot of capex mainly in the railway, infrastructure and defence space earlier.

But after the elections, the government's focus is more on populist measures. This doesn’t mean that the government will slow down its capex spree, but since the government’s kitty is full of populist promises offered during the election period, there is a limited scope for them to add significant capex from what they did last year. I would be very happy to be proven wrong here, but economics weighs heavily than expectations.

Do you see the government possibly announcing major PSU bank consolidation in 2026?

A major, broad-based PSU bank consolidation in 2026 remains unlikely. Following the completion of a significant consolidation cycle, the priority has shifted toward fortifying asset quality, governance standards, and sustainable credit growth. Any future movements will likely be selective and strategic, targeting specific operational efficiencies rather than pursuing scale for its own sake.

The current landscape suggests a focus on organic strength and capital adequacy over further structural disruption. This targeted approach ensures stability while allowing for surgical adjustments to the banking architecture as market conditions dictate throughout the upcoming fiscal year.

Do you see the new US Federal Reserve governor continuing the monetary easing cycle in 2026?

The current US Fed Governor Jerome Powell will end his term in May 2026. Kevin Hassett who is a ‘Trump man’, is the frontrunner for the Fed chair. President Trump has been yearning for bigger rate cuts ever since he became the President.

With his own man now in the Fed chair, getting more rate cuts won’t be a problem. However, even if Hassett becomes the Fed chief, he won’t be able to ignore inflation and cut rates beyond a point. Inflation has been running above the Fed’s comfort level of 2% for more than 4 years. If larger rate cuts materialise, then they would certainly add up to already sticky inflation.

Do you think FIIs still believe Indian market valuations are high, considering the inconsistency in their flows? Do you see any possibility of net inflows in 2026?

FIIs have remained cautious largely due to valuation discomfort, especially in segments where earnings growth has lagged price performance. The inconsistency in flows reflects selective allocation rather than a negative view on India as a market.

India continues to offer superior growth visibility, improving balance sheets, and macro stability compared to peers. As earnings catch up and global risk appetite stabilises, we do see the possibility of net FII inflows in 2026, particularly into large caps and sectors with strong cash flows and predictable earnings.

Do you see a bubble building up in AI stocks globally? Will the IT sector come back into focus in 2026?

There are credible indicators that the global AI stock rally is exhibiting bubble-like characteristics - skyrocketing valuations, circular financing, heavy capex and rising debt, and mounting expert warnings about excessive optimism and systemic risk.

Many dominant tech names now make up a large share of major indices, raising concerns that the AI-driven surge may be driven as much by narrative and capital flows as by underlying earnings growth. At the same time, much of the investment is tied to real enterprise adoption and infrastructure build-out, which could temper any sharp correction if monetisation gains follow through.

Regarding the IT sector in 2026, recent modest gains in tech indices reflect renewed sentiment, but earnings visibility remains mixed amid client caution and macro uncertainty. Broader focus will depend on how quickly AI spending shifts from experimentation to repeatable revenue, and how companies manage pricing and margins in a changing demand environment.

Overall, markets may see a rotation back in IT as investors seek value picks with stable earnings and growth.

What could be the hidden gem sectors in 2026?

Metals represent a significant opportunity as the global economy enters 2026. The sector is undergoing a structural transformation, shifting from cyclical commodities to critical strategic assets. The alignment of AI infrastructure, green energy transition, massive grid modernizations and government measures to protect the domestic industry has created a unique demand floor.

High metal intensity required for data centers and electric vehicle architecture ensures a long-term growth trajectory. With supply deficits emerging in key base metals and stabilized input costs, the industry is positioned for substantial value creation and sustained profitability throughout the entirety of the upcoming fiscal year.