What Should Investors Do Amid AI Disruption In The IT Market? | IT Stocks Update

本站添加: 2026-04-29

[00:00:00]Now when we talk about the other players, the IT sector which is really adding its weight and we know that IT has been volatile. It has seen a huge amount of cut and pressure because of the results and now is coming out and that is really helping the overall market momentum as well. But what's really not performing up to the mark or is clearly underperforming the key indices is the banking index and that remember is a very big reflection of the global view on the Indian economy and that's where it is showing pretty gains, but remember it is an underperformance to the key indices today. When we will take a look at the advanced decline ratio, it is showing a healthy return almost all the sectors in the green except media which is a very small component. So that's a snapshot of the market clearly. Bhavin Shah who's the founder and CIO of Samiksha Capital Private joins in now. Bhavin, always a pleasure chatting with you on NDTV Profit. My first question, directionally, what's your view on the overall market because even though there are gains today, there has been a consistent you know phase of volatility based on the global cues.

[00:01:13]Right. So I think the you know the global cues continue to be somewhat volatile and as you said and that I think is also weighing on the market.

[00:01:26]You know obviously we have seen you know brand new crude in particular back above 100 and you know still lack of clarity on how this whole the you know Middle East war situation resolves. And so that I think is weighing a little bit on the market, but I think you know there is also there are also some positive news with OPEC related you know with the UAE and so on and I think market probably you know taking a cue from that. I think what is important to understand is that before the start of the war the fundamentals for the Indian economy and corporate earnings were looking pretty robust.

[00:02:05]And so if you know obviously we have had this disruption which I think is also causing a fair bit of spike in prices in many categories and so there is you know there is that risk also looming here for the short term.

[00:02:21]But you know perhaps the view would be that you know it would be somewhat you know transient and eventually we go back to you know benefiting from many of the structural positives that we are likely to see and especially all those trade you know the free trade agreements or better you know more attractive trade agreements that we are either working on or have put in place.

[00:02:46]I think those benefits the benefits of those are going to be pretty profound and I think market probably also taking cues from that.

[00:02:53]That's right Bhavin. Those are important positives to note and it's a short-term transient view that the volatility is really reflective of. But Bhavin, if we can really look at the immediate few months because the war is continuing much against the expectation and wishful thinking of many in the market that it's a short-term war. But this particular crisis really continues with a stalemate on the negotiation front. Putting that into perspective, now if we look at the short-term view on the economic impact of lower than expected monsoons which is being talked about by IMD and the second the impact on the upcoming earnings for this present quarter because of the crisis continuing. How are you really seeing this short-term view and the next you know quarter's earning momentum?

[00:03:46]I mean I think we will probably see some you know impact in for example one category where we have seen very high price increases is in building materials. You know if you ask you know people in the industry they will talk about significant jump in cost of construction.

[00:04:06]Now you know what how it plays out in terms of you know if there are you know if it's slows down slows things down you know then it will affect the companies that participate in that space.

[00:04:18]And similar cost pass-throughs probably happening in other areas as well. You know a lot of chemical prices of raw chemicals and so on have also gone up which then feed into a wide range of sectors. So it is conceivable that overall consumption demand may have a little bit of an impact in the June and maybe even September quarter. That I think is something we have to be be aware of.

[00:04:44]Is that baked into the market right now Bhavin or it's yet to come?

[00:04:49]I don't think it is baked into the market.

[00:04:52]You know market is sort of in that you know recovery mode right now. So I don't think it is baked in. All right. So that's one important takeaway coming in that the next quarter's momentum which could see some pressure points because of the crisis may not be baked into the market right now. But Bhavin, what about the IT sector? It has gone through a huge amount of volatility, pressure, consolidation. Today of course is a good day, but you have tracked this sector very closely for a very long time.

[00:05:21]How do you see this present valuation and how do you see the next couple of years momentum for our top five IT companies with the AI thrust as one of the pressure points and the investors who are invested in the companies right now getting their returns and what is the potential?

[00:05:44]So I think the you know the correction in the sector in the share prices is reflective of fundamentals, but I would say that we are still not um at a point where one could you know buy the stocks based on some kind of a value purely because of the value. You know I think the the way I would think about it is that you know we probably don't have you know much of a top line growth maybe even modest decline is possible you know because of the size of these companies.

[00:06:19]You know I think I keep going back to one important fact that you know pre-COVID the growth rates for these companies were dipping down you know to mid single digits or even maybe even slightly less than that. COVID gave a bump and that is gone. Now we have this AI led meaningful deflation which I think is definitely having going to have an impact and I think the very thing is that we are still in that journey of you know improvement in AI models. So there is still incremental productivity boost that is coming our way. You know there was a one big positive surprise if I can call that in terms of the productivity boost that came in December with the launch of some of the new models for Anthropic and like. And I think that journey I mean that that disruption probably is still not completely done. And so I think it is you know more work getting done with fewer effort. I think that's the theme that is still playing out. And in that scenario it is uh very difficult frankly even for the you know the market watchers and you know analysts to figure out what are revenue growth to project for these companies for next two or three years. And you know I think the base case may be close to zero maybe slightly low single digit.

[00:07:41]And that I think is not good enough to be to excite anybody even at these prices.

[00:07:47]All right Bhavin. So that pressure point really remains an indecisive on the growth prospect of the IT sector and the top IT companies and AI pivot and disruption that to be watched out for.

[00:08:00]Now when we talk Bhavin about most of the big banks which have already come out with results and they also are a mirror of how the markets really view the overall economic you know trajectory. How are you seeing the banking space and also is there a sector of choice finally if you can leave us with which could be a good buy and in terms of valuation as well as potential growth that is a sector of choice for you?

[00:08:29]Um I mean I think the large banks you know they they definitely have a challenge with growth.

[00:08:38]You know we we are looking at relatively lower nominal GDP growth and you know the size of these banks also is is you know is is now coming into play where we are starting to see you know sort of uh you know say 10% slightly more than that kind of growth rates you know it may be sort of a more likely scenario. And so one has to look at that and figure out whether there is you know whether there there is good enough for meaningful share price appreciation. So that I think is a bigger challenge for the large banks you know that I I I see as of now. I mean I think then there are obviously going to be specific sub-segments within the financial space. You know they may still experience higher growth rates and so in the poison to selecting those companies you know one is really looking at generating superior returns from that space.

[00:09:38]All right Bhavin. I've got your point on that large banks with some challenges and of course the other parts pockets of the sector there are AMCs, there's insurance and the others which may show some growth momentum there. Bhavin Shah, always a pleasure speaking to you. Thank you.