India’s IT sector is facing short-term disappointment after recent earnings, with investors focusing on margin pressure and conservative growth guidance. Experts, however, argue the long-term outlook remains stable, pointing to AI-driven efficiency gains—especially for large firms—and the potential for steadier, sustainable growth as valuations cool.
Small-cap mutual funds have roared back with double-digit gains over the past month, outperforming mid and large caps. But experts caution the move looks like a sharp post-correction recovery, not a durable trend, citing stretched valuations and rising investor exuberance. They suggest disciplined SIPs for high-risk investors, while noting large caps may offer better risk-reward now.
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Dubai and Abu Dhabi markets are closed following Iranian strikes, leaving investors to judge how supply chains disruptions will translate into valuation pressure. While airports are resuming partial operations, private equity expects deals to slow for months and real asset investors are bracing for valuation corrections. Banks are also deferring decisions amid mounting uncertainty.
Indian equities have trailed global peers over the past year, hurt by soft earnings, elevated valuations, and foreign investors trimming holdings. The picture may be improving incrementally as valuations look more reasonable and policy reforms, along with global shifts, could draw fresh flows. Analysts suggest a potential rebound within 12 months, with attention turning to specific sectors.
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