IT services companies have already seen a meaningful correction, according to Hartmut Issel, Head of Equity and Credit APAC and Chief Investment Officer at UBS Wealth Management, who said the sector has "been punished quite a bit" amid pressure on topline growth and deflation.
Speaking to NDTV Profit, Issel said he remains optimistic on companies linked to artificial intelligence (AI), data centres and industrials, adding that the "high global demand of AI can't be questioned". However, he noted that AI companies will require heavy infrastructure investments and higher capital expenditure.
On India, Issel said his approach to the market is "not limited to large caps". While the rupee has depreciated, it is gradually stabilising, he said, adding that banking growth has doubled even though it is "not visible in the share market".
Looking ahead, Issel said 2028 would be "a good time" for foreign institutional investors to enter India, though he expects the earnings differential between India and other emerging markets to narrow.
On the macro environment, Issel said concerns around the Strait of Hormuz remain serious and that his base case factors in some implications of higher crude oil prices. He added that the next six to 12 months will be crucial from the perspective of the US-Iran conflict, with markets currently witnessing a downward trend due to elevated crude prices.
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