Speaking to ET Now, Sushovan Nayak from Anand Rathi highlighted the broader context behind this market reaction. “So, basically as you would be aware, Anthropic coming up with its [product] after that there was this Altruist, which was a [platform] which basically also got released and then the China bit which you are mentioning. So these will have a sentimental negative impact on Indian IT,” he said.
Nayak added that while these developments could create short-term pain, the long-term fundamentals of Indian IT remain strong. “The question is, if you look at, let us say, an OpenAI or an Anthropic, both of them are planning to go public. So, they will come up with these plug-ins almost at regular intervals. Each time they come up with that it will be another death knell on Indian IT, but I believe that this is going to be much more resilient. But there will be some short-term pain, which obviously we are going through, so that is what my limited submission is.”
He emphasized the continuing importance of implementation and customization of software, where Indian IT firms maintain a competitive edge. “At the end of the day, you need to implement and customise those softwares. So that is where Indian IT comes through. And with those hyperscalers putting in the amount of capex—like earlier in 2025 it was almost $400 billion for the top four, now coming to $600 billion—at the end of the day you need to have cloud transformation, data governance, data cleaning, and all of that stuff, where you end up becoming implementation partners for either a Databricks or a Snowflakes, who will [require] significant amount of work,” he noted.
When asked about valuations, Nayak said he is cautiously optimistic. “I would want to see how these folks go about, like both OpenAI and Anthropic, because if they keep on releasing such disruptive models every alternate day, then we become sentimentally negative. Obviously, I would gradually increase my buying in these, but I would possibly start looking at them for sure. I mean, Infosys has obviously been top pickers and will continue to be—it is such that these are disruptive times, so yes, that is a way I will look at it.”
Regarding opportunities in the market, Nayak expressed confidence in large-cap IT stocks. “As I had also mentioned earlier, we basically are still positive on large-cap IT, and I completely understand that there is legacy IT work that is also there which will potentially get disrupted. But the ones within the large-caps which are most adaptable or are leveraging on their gen AI tools to a larger extent, someone like an Infosys, someone like an LTIM or an HCL Tech, these are the ones which we like,” he said.
He further highlighted HCL Tech’s ER&D exposure as a source of resilience. “HCL Tech, because of the ER&D exposure, because 75% of their business is services and the other 25%—that is 15% ER&D, 10% would be around HCL Software—I think that would be a little more resilient in all of this. But as I said, this is more of sentimental things rather than creating a very structural decline in all of them, that is what at least my view is, but stand corrected on this.”Despite the current nervousness, experts suggest that Indian IT’s structural strengths and ability to partner in global AI and cloud initiatives should help the sector navigate these uncertain times.