Bet on the shovel sellers

Summary: Gold’s rally had an unexpected winner this year. Its surge is a reminder of a powerful idea in investing. Rather than chase the headline names, the real wealth often lies in the suppliers, enablers and bottlenecks powering each big theme. In this piece, we unpack why proxies compound more quietly and consistently, and spotlight where those opportunities are emerging across India’s growth cycle. When gold rallied this year, the real winner wasn’t a miner or a jeweller. It was MCX (Multi-Commodity Exchange of India). As trading volumes surged, the commodity exchange’s profit as well as stock rocketed. All this was not by holding gold but by simply selling the shovels in the gold rush. That’s the essence of proxy investing: betting on the ancillaries rather than the obvious. It’s less glamorous but often more profitable because every hot theme – energy transition, EVs, housing, railways or defence – creates an ecosystem of cables, sensors, valves, gears and software that quietly compound wealth long after the headlines fade. Why proxy plays work In every capex cycle, the front-page heroes – EV makers or infra players – face competition, regulation, cyclicality and most importantly, have overheated valuations. Their suppliers, meanwhile, enjoy annuity-like growth without binary product risk. They benefit from: Volume leverage: Suppliers sell to all players in a booming sector, not just one. Pricing power: Switching costs and qualification barriers keep margins sticky. Diversification: Ecosystems outlive product cycles. Capital discipline: Proxy businesses tend to be asset-light and cash-generative. Replacement: The parts remain in demand even during downcycles. So, to invest smartly in India’s growth decade, it’s ideal to find where in the value chain the bottleneck lies and back the company that owns it. A few of them are spotlighted here. Energy transition: Where the real power lies The world obsesses over solar parks and green hydrog

This article was originally published on December 01, 2025.