Semiconductor Stocks: Semiconductor sector is still in its initial stage in India, but future prospects look quite strong.…
highlights
- Due to EV revolution, 5G rollout and Digital India, the semiconductor sector may gain momentum in the coming years.
- Proper research and thoughtful investment can give good returns in the long run.
- The semiconductor sector is still in its nascent stage in India, but future prospects look quite strong.
The semiconductor sector is still in its nascent stage in India, but future prospects look quite strong. Government support, rising domestic demand and changes in global supply chains can take the sector to new heights. However, it is important to understand the risks before investing and adopt a long-term strategy. Investment done wisely and balanced can give better returns in future.
Status of semiconductor sector in India
Semiconductor chips have become the backbone of every modern technology today. They are used in smartphones, electric vehicles (EVs), data centers, artificial intelligence, telecom networks and defense equipment. This is the reason why this sector is becoming an important part of India’s growth story. Semiconductor industry is directly related to strategic sectors like electronics manufacturing, electric mobility, telecom and defence. Chips also play an important role in radar, avionics and secure communication systems.
India has long been strong in chip design and software, but now the country is also moving towards fabrication, assembly, testing and packaging. Huge incentives are being given under the Semiconductor Mission Scheme of the government, so that the dependence on imports is reduced and the domestic supply chain is strengthened.
The size of the Indian semiconductor market in 2023 was $34.3 billion, which is expected to cross $50 billion by the end of 2025. It is expected to reach $100.2 billion by 2032. The government has taken several steps to reduce this dependence. Under this, some schemes have been started, the main ones are-
- India Semiconductor Mission (ISM) – $10 billion boost
- Design Linked Incentive (DLI) Scheme
- Production Linked Incentive (PLI) Scheme
- Promotion of manufacturing under Make in India initiative.
Top Semiconductor Stocks: Where to Invest Your Money?
If we talk about investment, many big companies are active in activities related to this sector. Most companies in India do not engage in full chip manufacturing but work in different parts of the value chain – such as embedded system design, electronics manufacturing services (EMS), support such as special materials and testing solutions.
SEBI registered market expert Vipin Diksena has placed his bet on shares of 4 companies – Moschip, Kaynes Tech, SPEL and SYRMA…
Moschip Technology is India’s only listed pure play fabless semiconductor company in the consumer electronics, automotive and industrial applications sectors. He said that on long-term charts, the stock remains in a higher-high, higher-low structure, with the broader trend clearly being up. The price is trading above SMA 200.
Vipin Diksena said the stock is going through time-correction with strong support at Rs 170, which will act as stop-loss. The RSI indicator has also cooled off from overbought levels. The stock can clearly go towards 320 in the next 6 months.
Keynes Technology is a leading Indian end-to-end electronics manufacturing services (EMS) provider, specializing in IoT-enabled solutions for the automotive, aerospace, defense and industrial sectors. Keynes remains a structurally strong growth stock undergoing a corrective reset. The RSI has moved into the oversold region and is now trying to turn upward.
Vipin Diksena said a sustained move above Rs 4,250 could confirm a short-term trend reversal and open the way towards Rs 5,000 and higher levels in the medium term. To avoid losses, he has advised investors to keep the stoploss at 3,750.
Vipin Diksena said that SPEL Semiconductor Limited is India’s leading OSAT provider, specializing in IC assembly, testing and packaging for communications, automotive and consumer electronics.
The stock maintains a broad higher-high, higher-low structure. The stock has formed a consolidation base above the previous breakout level. The stock has absorbed recent gains through a time correction. The stock has strong support at Rs 125. Sustained move above Rs 175 can open momentum towards Rs 220 – 250 in medium term.
Syrma SGS Technology is a premier Indian EMS provider advancing the semiconductor supply chain through high-end PCB fabrication. The stock is trading near its all-time high, with a higher-top higher-bottom structure in place.
The stock is trading above its long-term and short-term moving averages. RSI at 62 shows positive momentum base. The stock’s resistance is at 900, a breakout above it will take the stock to 1100 in the medium term.
Shares of these companies are also in focus-
Bharat Electronics Limited (BEL)
- Bharat Electronics Limited (BEL) manufactures modern electronic systems for the defense sector.
- The company is now expanding in the civil sector also.
- Established in 1954 under the Ministry of Defence.
- Manufactures radar, defense communications, electronic warfare systems and avionics.
- Now it is also expanding into civil aviation, anti-drone and medical electronics.
CG Power and Industrial Solutions
- Active in Power and Industrial Systems.
- Manufactures transformers, reactors, switchgear and railway equipment.
- Earlier known as ABB Power Products.
- The company provides energy technology, grid installation, semiconductor devices and storage solutions.
V-Guard Industries Limited
- Manufactures stabilizers, inverters, cables, motors and home appliances.
- Acquired Sunflame Enterprises in 2022-23.
- Big company in FMEG sector.
- More than 90% of products manufactured in India.
- Exporting to 60+ countries.
What things should be kept in mind before investing?
Financial performance of the company
Be sure to check revenue, growth, profit and debt position. Find out at which level in the value chain the company operates? Are its customers from different sectors? Is the balance sheet strong or not? Is he getting the benefits of government schemes? Is his track record strong?
Global demand and market trends
The sector is getting a boost from the demand for EV, 5G and AI technology. Keep a close eye on this. There should be an eye on which type of orders are being received by which company.
Diversification
Don’t invest in just one company. Invest in different sub-sectors.
government policies
Schemes like PLI and DLI can have an impact on companies.
Should you invest in these stocks?
- The semiconductor sector has strong long-term growth potential, but the sector is also highly volatile.
- There may be a change in global demand, due to which the risk of money getting stuck may increase.
- Technology is changing rapidly. Due to this, the outlook of this sector may change.
- Global competition can spoil the balance sheets of companies.
Suitable for which investors?
Semiconductor stocks are better for investors who want to invest for the long term and have the ability to tolerate ups and downs. This sector is cyclical. That is, it never remains the same, sometimes rapid growth and sometimes decline can also be seen.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice in any way. ET NOW Swadesh recommends its readers and viewers to consult their financial advisors before taking any money-related decisions.
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