Indian IT stocks are experiencing significant declines, sparking fears of an AI-driven "Kodak moment." While some analysts warn of direct exposure to AI-induced displacement, others argue the market is oversimplifying the role of IT services. Experts suggest AI could paradoxically unlock massive modernization opportunities, potentially fueling the industry's next growth phase.

Indian IT stocks face pressure due to AI fears. Companies like Wipro and TCS have seen significant drops. Investors are now looking at domestic sectors. Financials, capital goods, consumption, and autos show strong potential. Banking sector credit growth is robust. Government spending supports infrastructure. Rural demand is recovering. These sectors offer better earnings visibility amid global uncertainties.

LIC is making a contrarian bet on the IT sector, investing heavily in companies like TCS and HCL Technologies while reducing its exposure to banking giants such as SBI and HDFC Bank.

Indian IT stocks face an AI-driven reset, with growth expectations recalibrated. Fund managers see opportunity in banking and financials, citing recovering credit growth and a bottoming NPA cycle. Automobiles, especially commercial vehicles, also show early recovery signs. While manufacturing and capex themes remain strong, valuations are a concern. Consumption, particularly FMCG, presents an unfavorable risk-reward.

Infosys' AI roadmap, targeting a $300-400 billion market, failed to impress investors, causing shares to tumble despite a bullish outlook from brokerages. While the company highlighted AI as a structural tailwind, market concerns persist over the immediate deflationary impact on legacy revenues versus the long-term benefits.

PhonePe’s proposed IPO at a $13–15 billion valuation could become a landmark fintech listing in India and may trigger a valuation re-rating for Paytm, according to Macquarie. The company dominates the UPI ecosystem with about 45% market share, supported by over 657 million registered users and 47 million merchants, staying ahead of rivals like Google Pay and Paytm.

Indian markets saw IT stocks fall amid AI worries. Analyst Deven Choksey sees this as a buying chance. He believes AI will help IT firms flourish by enabling outcome-based pricing and faster project delivery. This shift creates new revenue streams. Choksey also highlights growth potential in FMCG exports due to trade agreements. He advises investing in large-cap IT companies.

India’s recent trade agreements signal a strategic shift toward competitiveness-led global integration. By improving tariff parity and market access with major economies, India is strengthening export visibility, funding its current account deficit sustainably, and positioning itself as a key participant in global manufacturing and services supply chains.

India Inc's December quarter earnings season largely met expectations, with brokerages turning constructive on select market pockets. Investors have 35 stocks to consider, highlighted for strong earnings momentum or likely near-term turnarounds. The overall earnings revision trajectory has become more palatable, with upgrades supporting profit growth.

On the other hand, geopolitical risks are still high. Global risk indicators continue to show heightened concerns around interstate tensions and geoeconomic confrontation through 2026. Such uncertainty can keep volatility high in commodity markets—even if spot prices are taking a breather.