Nischal Maheshwari flags reinvention ahead for IT, backs domestic themes

Volatility continued to dominate market sentiment last week, with technology stocks leading the decline as investors grappled with the potential impact of artificial intelligence on India’s globally competitive IT services sector. While concerns have emerged about whether AI could disrupt traditional outsourcing models, market experts believe the situation calls for adaptation rather than alarm.

Speaking to ET Now, market expert Nischal Maheshwari dismissed fears of structural obsolescence, saying, “I think that is a very extreme statement that they will become redundant… they have to find a new way out of this… medium to long term there is a challenge but in the short term it is overdone.” He indicated that the recent correction reflects uncertainty and strong reactions to global developments, particularly around how AI could reshape pricing and delivery models.

He noted that companies will need to rethink their strategies as technology lowers coding costs and gradually shifts contracts toward outcome-based models, making reinvention essential over time.

On the broader market, Maheshwari said the weakness in IT does not directly translate into pressure on other sectors, adding, “FMCG as a base in the consumption would not be impacted… domestic consumption is what one should focus on.” He suggested that infrastructure, cement, and consumption-oriented businesses could remain relatively resilient amid geopolitical uncertainty, while any impact from job disruptions may be felt more in big-ticket discretionary segments such as real estate and automobiles over time.

Discussing public sector refiners, he pointed to attractive valuations, saying, “Their valuation looks interesting… at these prices one can accumulate these stocks,” reflecting a constructive view as oil prices remain broadly stable.

On valuation comfort for IT stocks, Maheshwari said, “Low double digit is a good place to start getting positive… a 12 to 15 time multiple is a good number where you should be looking to accumulate,” emphasising the importance of focusing on cash generation amid limited visibility.He also urged caution on midcap IT valuations, noting, “The model itself is getting challenged… there is no need for giving them a higher PE at the moment,” as the industry gradually transitions toward new operating frameworks.Overall, the evolving conversation around AI suggests that while disruption risks are real, the sector’s future will likely be defined by how effectively companies adapt. For investors, balancing caution with selective accumulation and keeping an eye on domestic demand themes may offer a steadier path through ongoing market volatility.