Veteran market investor Kenneth Andrade has signalled a sharp tactical shift away from India’s technology sector, warning that structural changes driven by artificial intelligence (AI) are creating long-term uncertainty for traditional IT business models.
According to Andrade’s latest investment view, a fresh portfolio built today would exclude IT stocks entirely. He argues that AI-led disruption is compressing profit margins and raising questions about the terminal value of legacy outsourcing models.
‘Wait and watch’ on technology
While near-term job losses in IT may remain contained, Andrade believes automation will gradually reshape employment structures across the sector. At the same time, he notes that new technology capital expenditure cycles could generate fresh job creation in adjacent areas.
For now, his strategy favours patience. He views inaction as preferable until stronger and more resilient technology business models emerge.
Focus shifts to cyclical opportunities
With IT on the sidelines, Andrade is turning attention to sectors with resilient cash flows or those nearing cyclical bottoms.
In banking and financial services, he expects the sector to pause after two decades of market leadership, suggesting its share of overall market capitalisation may not expand significantly from current levels. He prefers selective stock picking rather than broad sector exposure.
Specialty chemicals are seen approaching a cyclical trough after years of pricing pressure and heavy capital expenditure. Pharmaceuticals and commodities, meanwhile, form a core allocation in what he describes as an “ex-IT” portfolio strategy.
He is also constructive on automobile companies with strong export exposure, while in real estate he believes developers must prioritise sales volumes over aggressive pricing to sustain long-term growth.
Quick-service restaurant chains emerge as a contrarian bet, with Andrade arguing that excessive pessimism is already reflected in valuations.
Valuations versus reality
Despite market optimism, Andrade cautions that earnings growth remains modest. India has delivered single-digit earnings expansion over the past two years, and a meaningful recovery in consumer demand may take longer than investors expect.
Historically, he notes, market corrections tend to follow periods when valuations have “priced in perfection,” leaving little margin for disappointment.
