Global markets are buzzing with concerns over rising tariffs, and Indian investors have been watching closely as trade tensions with the U.S. make headlines. Just this week, new tariff announcements sparked a dip in the Nifty and Sensex, rattling investor sentiment. But not everyone is worried.
Varun Saboo, Head of Equities at Anand Rathi Shares, believes the panic is overstated. In fact, he calls the Indian IT sector a “must-buy” at current valuations, suggesting that the long-term fundamentals of technology companies outweigh short-term noise.
His optimism comes at a time when investors are searching for clarity amid uncertainty—and it offers a refreshing perspective for anyone considering where to put their money next.
Why Tariff Concerns May Be Overstated
Trade tensions between India and the U.S. have resurfaced after Washington announced a 25% tariff on select Indian-origin goods. While this news triggered an immediate market dip, analysts like Saboo argue the impact may not be as severe as feared.
- India’s diversified trade strategy: Over the past decade, India has expanded its global trade partnerships beyond the U.S., including Europe, Southeast Asia, and Africa.
- Resilient domestic market: Unlike some export-heavy economies, India has a strong local demand base that cushions global shocks.
- Historical perspective: In earlier tariff episodes, Indian markets initially reacted negatively but recovered quickly once the long-term fundamentals reasserted themselves.
According to Reuters, the immediate selloff erased August gains, but experts suggest the correction is more sentimental than structural.IT Sector: Why Saboo Calls It a “Must-Buy”
Varun Saboo’s bullish stance on IT is not without reason. The sector remains one of India’s strongest engines of growth, innovation, and global competitiveness.
Key Strengths of Indian IT:
- Global Client Base – Indian IT majors like TCS, Infosys, and Wipro generate over 70% of their revenue from international markets, reducing dependence on one economy.
- Digital Transformation Demand – Businesses worldwide are investing heavily in cloud services, AI, and cybersecurity, areas where Indian firms have a growing presence.
- Attractive Valuations – With markets trading at around 18× one-year forward earnings, IT stocks are relatively undervalued compared to their growth potential.
- Strong Balance Sheets – Most IT companies carry little to no debt and hold significant cash reserves, making them financially resilient.
How Indian IT Compares Globally
Here’s a quick comparison of Indian IT versus global peers:
| Factor | Indian IT (TCS, Infosys, Wipro) | Global IT (Accenture, IBM, Cognizant) |
|---|---|---|
| Average Valuation (P/E) | ~18× forward earnings | ~23–25× forward earnings |
| Growth Drivers | Cloud, AI, outsourcing, fintech | Cloud, AI, consulting, digital ops |
| Revenue Dependency | Diversified, strong U.S. & EU base | More developed markets, slower growth |
| Cost Advantage | High (skilled workforce at scale) | Moderate (higher wage structures) |
| Balance Sheet Strength | Low debt, strong cash reserves | Mixed (some carry significant debt) |
This table shows why Saboo’s confidence in Indian IT stocks is justified. Not only are valuations attractive, but growth opportunities are aligned with global digital trends.
Market Sentiment vs. Long-Term Reality
While tariffs and short-term global events often shake markets, investors who zoom out see a different picture.
- Short-term: Possible dips due to panic selling.
- Medium-term: Stabilization as companies adapt and investors refocus on earnings.
- Long-term: Growth driven by technology adoption, digital transformation, and India’s role as the world’s back office.
Saboo emphasizes that investors should look beyond the headlines. The real story is the digital boom that continues regardless of trade noise.
Examples of IT Resilience
- TCS has continued to post double-digit profit margins despite global economic slowdowns.
- Infosys recently announced multi-billion-dollar deals with European banks for digital transformation projects.
- Wipro has expanded aggressively into cybersecurity and AI, sectors that are projected to grow exponentially.
These examples highlight why Indian IT companies are positioned as global leaders in the technology space.
What Investors Should Keep in Mind
If you’re considering IT stocks, here are some practical pointers:
- Focus on leaders: TCS, Infosys, Wipro, HCL Tech remain safe bets.
- Watch mid-cap IT: Companies like LTIMindtree or Mphasis can offer higher growth, albeit with more volatility.
- Diversify: Don’t just buy IT—balance with sectors like banking or FMCG to manage risks.
- Track currency trends: A weaker rupee often benefits IT exporters, boosting revenues.
External Insights
For additional insights into market valuation and IT outlook, you can explore:
- Economic Times Report on Varun Saboo’s Market View
- NASSCOM’s Annual IT Industry Report for in-depth industry statistics and projections.
FAQ,s
1. Why is the IT sector considered safe during global uncertainty?
Because IT services are essential for businesses worldwide. Even in downturns, companies invest in digital tools to cut costs and improve efficiency, keeping IT demand stable.
2. Are tariffs likely to hurt Indian IT companies directly?
Not significantly. Most tariffs target goods, not services. Since Indian IT exports are service-driven, the direct impact remains limited.
3. Which IT stocks are the best picks right now?
Market leaders like TCS, Infosys, and HCL Tech are considered strong bets. For higher risk-reward, mid-caps like LTIMindtree can be explored.
4. How does currency fluctuation affect IT earnings?
A weaker rupee boosts revenue for IT exporters since most of their income comes in dollars or euros.
5. Is now a good time to invest in IT stocks?
According to Varun Saboo, yes. With valuations at attractive levels and long-term demand intact, IT stocks are a “must-buy.”
Conclusion
Tariff headlines may dominate today’s market chatter, but experienced investors know that fundamentals ultimately drive long-term returns. Varun Saboo’s bullish call on Indian IT stocks comes at a crucial moment, reminding us not to confuse short-term noise with long-term opportunity. With robust global demand, strong balance sheets, and valuations sitting comfortably below global peers, the IT sector offers a compelling case for investors seeking growth and stability. For those willing to look past temporary turbulence, Indian IT may well be the backbone of tomorrow’s portfolio success.
Nand Kishor is a content writer covering business, economy, and world affairs. With a background in journalism, he focuses on clear, ethical, and insightful reporting. Outside of work, he enjoys chess, cricket, and writing short stories.
