Speaking to ET Now, Shenoy said markets are reacting emotionally to a surge in negative news, particularly around energy supply disruptions. “The markets are bleeding… the Nifty 500 is now down about 10% from the all-time high and there is a lot of negative news. Markets are responding in a panicky mode as if these things are permanent,” he said.
He noted that industries dependent on crude oil and natural gas could face temporary disruptions and pricing mismatches in the near term. However, Shenoy believes such shocks usually fade once supply stabilises. “The key word here is temporary because I do not think this will last for too long,” he said, recalling that crude had surged to about $122 during the 2022 Russia-Ukraine conflict before eventually cooling as supply returned.
Shenoy added that the current market reaction is relatively limited compared with deeper corrections seen globally. “The panic currently is not meaningful… it is not as bad as a 10% or 8% fall seen in some global indexes,” he said, adding that such phases often create opportunities for long-term investors. “I have always seen these panics as useful opportunities to rethink an investment strategy.”
While exports could face short-term pressure due to supply disruptions and rising input costs, Shenoy believes the longer-term impact of geopolitical conflicts may actually benefit Indian industry. Reconstruction demand and global supply chain diversification could boost sectors such as infrastructure, commodities and defence manufacturing. “In the longer term I do not see this as a major negative… the demand for reconstruction and diversification of supplies will happen across the globe and Indian industry should benefit,” he said.
He also believes investors do not need to drastically change their investment strategy during such phases. Instead, Shenoy recommends focusing on financially strong companies, especially midcap firms with low leverage. “Midcap and smaller companies that are not leveraged and do not have too much debt are the ones that could succeed in the long term,” he said.
According to Shenoy, the recent correction has begun to create pockets of value in the market. Several midcap manufacturing companies are now trading at far more reasonable valuations than before. “Many manufacturing companies in the midcap zone are now below 20 times earnings, sometimes around 15–16 times,” he noted.Among sectors that appear relatively attractive, Shenoy pointed to pharmaceuticals and information technology. Many IT companies, he said, have strong balance sheets and minimal debt, making them look like value opportunities after the sharp correction. “IT has turned more into a value play considering the cash cushion and lack of debt… and the AI fears are overblown,” he said.
At the same time, Shenoy warned investors to be cautious about expensive consumption stocks, particularly in the FMCG space where competition and input costs remain high. “I would not rush to buy relatively overpriced domestic FMCG consumption stocks,” he said, adding that the sector could face more persistent valuation pressures.
On the technology sector specifically, Shenoy believes concerns around artificial intelligence hurting IT services companies may be exaggerated. While IT stocks have corrected sharply—some falling 30–40%—he argues that AI could ultimately boost demand for outsourcing.
“IT stocks have fallen quite considerably… but I do not feel that is a meaningful long-term reaction,” Shenoy said. He explained that as companies adopt AI, productivity improvements could lead to more projects rather than fewer. “If you get productivity using AI, you will want to do more work, not less,” he said.
He also pointed out that global firms facing talent shortages and visa challenges may increasingly turn to outsourcing. “Companies in the US are already talking about using outsourced engineers from India with AI productivity to get more work done,” Shenoy said.
While the timing of a market bottom remains uncertain, Shenoy believes current levels could offer attractive entry points for long-term investors. “I do not know if today is the bottom… but for a three-year plus horizon this is a reasonable place to consider positions,” he said.
Despite the recent volatility, Shenoy’s broader message remains that geopolitical shocks and commodity spikes tend to trigger temporary disruptions—but they can also create opportunities for investors willing to take a long-term view.