AI-led IT selloff may be overdone, not the time to exit, says Edelweiss AMC CIO

Trideep Bhattacharya, CIO–Equities at Edelweiss Asset Management, which manages assets worth over ₹3.5 lakh crore, believes artificial intelligence (AI) will transform businesses over time, but markets tend to overreact in the short term.“AI will clearly transform not only tech, but all other businesses, but markets in the near term are fairly emotional sort of animals from that standpoint,” he said.

Bhattacharya said valuations in Indian IT are approaching more reasonable levels and while more downside is likely in the near term, he believes this is not the time to exit for investors with a one- to two-year view.
Instead, corrections may offer opportunities to gradually accumulate quality names. He added that valuation multiples could soon reach levels rarely seen in history, making the sector attractive from a long-term perspective.Read Here | How serious is AI risk to Indian IT services companies? Vishal Sikka explains

On the broader market, he highlighted that the recent earnings season has not been weak. In fact, he expects a second straight quarter of earnings upgrades for the Nifty 50 index. With global trade agreements signed and currency stability improving, he believes India is moving in the right direction relative to global peers.Bhattacharya said his fund has increased exposure to financial services in recent months. He believes credit growth, which had slowed sharply last year, is now bottoming out and could recover to 13–15% over the next six to twelve months. A rebound in credit growth typically supports banks and financial stocks.

He said the fund has added select public sector banks and mid-tier private sector banks during the correction, as valuations have turned attractive and growth prospects are improving.

On gold and gold finance companies, he advised caution. He believes precious metals should be part of long-term asset allocation, but after the recent rally, investors may consider trimming exposure. He said, “The next trade, maybe over the next few months, is probably to lower down the weightage, rather than kind of increase weightage from here.”

Within consumption, he sees early signs of improvement. He pointed to better trends in the quick-service restaurant (QSR) space and expects the impact of recent reforms to gradually spread across sectors beyond automobiles. The fund is selectively evaluating opportunities in these areas.

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