Port Shelter Investment Management CEO Richard Harris believes India's technology sector is becoming increasingly attractive despite global volatility in AI-related stocks. As reported by CNBC TV18, Harris expects AI investments to continue and views India's reliability as a key strength that strengthens its investment appeal. The veteran investor noted that India has lagged global equity markets but now appears well placed for long-term growth, with the country positioned as reliable and open for business at a time when global supply chains continue to face disruptions. Harris emphasized that Indian technology companies have a lot of scope in the tech area as they move from old-economy tech to new-economy tech.
Indian IT stocks may be bottoming out as the global AI trade cools, according to Jitendra Gohil, CIO-Listed Equities at Bajaj Alts. As reported by CNBC TV18, while the broader market has recently fallen 6% to 7%, the IT index has gained 3.5% to 4% as investors shift money into the sector. However, Business Standard reports that India's IT giants may lack the ability to lead the country's AI transformation in their current form, with Rohit Tandon, managing director AI and insights practice leader at Deloitte LLP, noting that "we cannot expect the big IT firms in India, in their current shape and form, to be at the forefront of this AI change." Large-cap funds and foreign investors are moving investments away from Asian AI stocks, which have rallied sharply over the past two years, as the new wave of change is most likely to be fuelled by people who are not bridled by the past.
India's macroeconomic environment is presenting a strong setup for the next six to nine months, driven by robust tax collections and upcoming domestic and global catalysts, according to Jitendra Gohil, CIO-Listed Equities at Bajaj Alts. As reported by CNBC TV18, the country's bond market performance also stands out against global peers, with Indian yields having remained relatively stable since February 28, outperforming developed markets despite a recent 10 to 20 basis point surge. Gohil noted that "if I look at next six to nine months, it's a very good, I think a perfect setup for India where macro is very strong and there are multiple catalysts."
Goods and services tax (GST) collections have increased by 14% to 15% over the last two months, while net direct tax collections are up approximately 31% year-to-date, according to CNBC TV18 reports. The festive season build-up has been positive, coinciding with the start of Navratri, creating favorable conditions for domestic consumption. Beyond domestic factors, potential stimulus spending in the United States ahead of its November midterm elections could provide additional tailwinds for the Indian market.
Rising US interest rates could threaten AI spending as higher rates could make AI infrastructure investments less attractive for technology companies. According to Gohil, if inflation and rising oil prices push the yield on 10-year US government bonds to 5.5% or 6%, the cost of investing in AI infrastructure could become less attractive. Hyperscalers have outstanding debt of around $630 billion, with most companies generating negative free cash flow after heavy infrastructure spending. Gohil warned that "it's a really risky signature sign that look, we have already spent trillions of dollars of this capex and earnings will be back loaded." Harris noted that the recent sell-off in Korean and Taiwanese technology stocks is largely a market correction after strong gains rather than a structural shift, with the current correction in global AI names not signaling the end of the AI investment cycle.
Looking ahead, the Uttar Pradesh elections next year and the implementation of the Eighth Pay Commission are expected to act as key catalysts, according to CNBC TV18 reports. The combination of strong macroeconomic fundamentals and multiple domestic and global triggers positions India favorably for the coming period. Multiple trigger points are aligning to support the domestic market, with the festive season build-up and upcoming elections providing additional momentum for the Indian economy. Business Standard notes that India has a huge young population and an open environment, creating scope for new players to emerge in the AI space, while enterprises are expected to adopt hybrid AI models combining closed and open models for different applications.
