Fund Managers Find Value in Indian IT Stocks

At the India Investor Festival 2026 in Mumbai, Economic Times reports that veteran fund managers Rajeev Thakkar of PPFAS Mutual Fund and Sankaran Naren of ICICI Prudential Mutual Fund discussed the outlook for Indian IT stocks. Per Economic Times, Naren called the sector a "contrarian valuation call" and said it remains unclear "whether this is a value trap because of disruption, or a cyclical slowdown," adding "If AI is truly disruptive, several sectors will get disrupted. But the market is selectively punishing IT." Thakkar told the session that Indian IT firms have repeatedly navigated major technological shifts, citing Y2K, the dotcom crash and the SaaS wave, Economic Times reported.

Companies providing traditional software development and IT services face two broad technical pressures industrywide: automation of routine coding and increased demand for AI integration work. Industry-pattern observations show incumbents often defend revenue by shifting from commoditized delivery to higher-value services such as AI tooling, systems integration and domain-specific solutions. For practitioners, this commonly means more work on data pipelines, MLOps, and embedding models into legacy enterprise systems rather than pure replacement of all existing workflows.

public markets have been repricing Indian IT names on concerns about AI-related disruption, weaker discretionary client spend and softer global demand, per the Economic Times coverage of the event. The fund managers quoted in the report framed the situation as ambiguous between structural disruption and cyclical weakness, which makes valuation calls more complex for investors. For portfolio managers and corporate strategists, that ambiguity translates into a higher premium on observable revenue mix changes, client contract language and proof points of AI-led revenue streams.

• •Quarterly guidance and client commentary for signs of permanent budget reallocation toward AI projects versus short-term softness.
• •Revenue mix shifts inside vendor disclosures, specifically growth in AI consulting, platform and managed services.
• •Large contract renewals and win rates for legacy outsourcing versus new AI-enabled transformation mandates.

Industry observers will also monitor whether reported market allocations and valuation gaps close as earnings evidence accumulates.