“The capitulation in positioning in IT sector looks largely done. Stocks have bounced from their lows, but we see no earnings recovery yet,” said Venkatesh Balasubramaniam, Managing Director and Head of Research at JM Financial Institutional Securities, in an interview with Moneycontrol.
He believes the worst of the de-rating is behind the IT sector, but a recovery is likely to materialise only in 2027.
Balasubramaniam expects the pace of FII outflows to moderate, although he is not yet calling for a reversal. A sustained market recovery would require a decline in US 10-year bond yields, softer crude oil prices and earnings upgrades, he said.
Do you see a shift in US politics, and will it significantly affect asset classes?
Yes, there is a reasonable chance of a shift in Congress. A Democratic House looks likely, and the Senate is closer. The Iran war is a big reason. Pump prices have risen sharply since the conflict began, with the US national average above US$4 a gallon in early October 2026. Surveys show voters blaming the administration for it and ranking affordability and an end to the war among their top concerns. That has put even traditionally Republican states in play.