Ahmedabad Times

Issues round synthetic intelligence disrupting conventional expertise providers have stored buyers cautious on Indian IT shares over the previous yr. Weak discretionary spending, slower world demand and muted earnings progress have additional weighed on sentiment. Nevertheless, veteran fund managers Rajeev Thakkar of PPFAS Mutual Fund and Sankaran Naren of ICICI Prudential Mutual Fund imagine elements of the sector are starting to look engaging once more.

Talking on the groww India Investor Pageant 2026 in Mumbai throughout a session titled The Artwork of Not Shedding Cash, the 2 fund managers shared their views on the altering IT panorama and whether or not AI might basically alter the way forward for Indian software program providers firms. Each fund managers stated that they’re discovering alternatives in IT whilst broader sentiment in direction of the sector stays cautious.

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Veteran fund supervisor Sankaran Naren described the present setup within the IT sector as a “contrarian valuation name”, although he acknowledged that the business nonetheless faces real disruption dangers from AI.

“It’s a contrarian valuation name. However whether or not it’s a worth trapthat shouldn’t be clear,” Naren stated on the occasion.

In accordance with him, markets have sharply de-rated IT firms as a result of buyers worry that AI might scale back demand for conventional coding and software program providers. Nevertheless, he stated it’s nonetheless unclear whether or not the sector is going through a structural disruption or merely a cyclical slowdown linked to altering world spending priorities.
“We’re grappling with whether or not this can be a worth lure due to disruption, or a cyclical slowdown due to what is occurring with AI capex. We’re nonetheless doing the work,” he added.Naren additionally identified that if AI-led disruption turns into extreme sufficient, the impression might not stay restricted to IT providers alone.

“If AI is actually disruptive, a number of sectors will get disrupted. However the market is selectively punishing IT,” he stated, whereas noting that allocations to the sector amongst mutual funds stay comparatively low.

Rajeev Thakkar, however, highlighted how Indian IT firms have repeatedly navigated main technological shifts during the last three many years.

“Within the late Nineteen Nineties, individuals thought these firms have been solely about Y2K. Then got here the dotcom crash. Later through the SaaS wave, individuals questioned why shoppers would even want IT providers firms,” he stated.

In accordance with Thakkar, the business has traditionally tailored to disruptions fairly than getting displaced by them.

“Individuals are actually saying this time it’s totally different, that AI is changing developer work and there will not be sufficient work to go round,” he stated.

Nevertheless, Thakkar argued that AI-driven productiveness might finally broaden demand fairly than shrink it. Referring to the financial precept generally known as Jevons’ Paradox, he defined that decrease prices usually result in increased general consumption.

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“If 10 individuals can now do the work of fifty, prices come down. However decrease prices also can improve utilization and demand,” he stated.

He drew parallels with industries comparable to telecom and low cost broking, the place falling prices ultimately expanded buyer adoption and general market dimension.

Regardless of their constructive stance, each fund managers maintained that their outlook stays dynamic and depending on how the AI narrative evolves globally.

“As of now, that’s the base case. However as Naren stated, we must maintain re-evaluating,” Thakkar added.

The broader dialogue centered on threat administration, capital preservation and disciplined investing, however the comparatively optimistic view on IT stood out at a time when the sector stays largely out of favour amongst buyers.

(Disclaimer: Suggestions, solutions, views and opinions given by the specialists are their very own. These don’t characterize the views of The Financial Instances)

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