Mumbai-based Sowilo Investment Managers has made a dramatic transformation in its investment strategy, increasing its IT sector allocation from zero exposure in March 2026 to over 20% currently. According to reports from CNBC TV18, fund manager Sandip Agarwal has expressed confidence in raising stakes further, citing the sector's undervaluation despite previous concerns about AI disruption. The firm manages nearly ₹238.07 crore and had maintained no IT exposure until March 15, marking a complete strategic pivot. This shift aligns with broader market trends as investors increasingly gravitate towards hedge funds as their asset class of choice for 2026, driven by impressive performance attributed to the artificial intelligence sector.
Agarwal's bullish outlook is primarily driven by recent developments in enterprise AI adoption, particularly comments from Anthropic CEO indicating increased focus on selling and opening up enterprise AI solutions. As reported by CNBC TV18, he believes this represents a very positive development for Indian IT and global IT consulting services, with enterprise AI opening up significant new business opportunities. The optimism has been further supported by recent calls from AI leaders, including Anthropic CEO Dario Amodei, to slow the rate of AI advancement and create more time to manage its risks. This development suggests a more measured approach to AI deployment that could benefit traditional IT services.
The IT sector experienced a stellar rally on Tuesday, with the combined market value of all Nifty IT index stocks surging by over ₹1.2 lakh crore in opening minutes of trade. According to CNBC TV18, this rally was driven by increasing pressure to rein in AI capabilities surge. However, before the recent sentiment turnaround, investors had feared sharp pricing deflation in IT companies as AI-coded software increasingly competed with traditional services. CLSA had previously estimated 10-15% pricing deflation on average and 30-40% in some cases for Indian IT companies. The recent market boom reflects increased investor confidence in the sector's recovery potential.
Despite previous AI disruption fears, Agarwal projects significant earnings growth potential for the sector. As reported by CNBC TV18, he believes cumulative earnings per share (EPS) may grow 45% to 70% over the next three years. Even maintaining current valuation multiples, this earnings growth could support annualised returns of around 13% to 14% for large IT stocks and at least 20% for mid- and small-cap companies. The optimism is further supported by improved AI frontier models from Anthropic, OpenAI, Google and Meta, which have made software-related tasks cheaper and narrowed capability gaps between models. This earnings growth potential is particularly relevant as investors are witnessing an unexpected surge in capital flowing into hedge funds, breaking a three-year trend of stagnation.
