Kant noted that despite nearly 175 basis points of U.S. rate cuts over the past two years, discretionary spending in the IT sector has not improved. He remarked that companies had long argued that rate cuts would boost tech spending, but “nothing has changed dramatically for IT.” He highlighted that revenue growth remains in the mid-single digits and that even strong midcap names like Coforge and Persistent have turned cautious, with Coforge holding back its guidance. According to him, the sector is undergoing an extended phase of disruption driven by rapid AI adoption. He expects large IT firms such as Infosys and TCS to see “a 5–6% trading upside” aided by currency tailwinds but believes that structurally “nothing changes for IT.” For investors, he sees better opportunities in midcap IT companies, which he says are “better placed because they are in the services side rather than products.”
Turning to aviation, Kant warned that more challenges lie ahead for IndiGo. He pointed out that the airline is dealing with weak margins, currency pressure, and uncertainties around its large aircraft acquisition plans. He said, “near-term pain is still ahead,” suggesting that both Q3 and Q4 could be difficult. He stressed that pilot shortages and regulatory approvals may slow expansion, adding that growth expectations for FY27 and FY28 may need to be cut by 15–20%. In his view, the stock may still see trading bounces, but he advised avoiding it until clearer visibility emerges.
The metals sector, however, appears more promising. Kant described the recent consolidation in metal stocks as healthy and not a sign of weakness. He said there are “no major headwinds,” except for Tata Steel, which remains a complex case due to its European exposure and debt burden. He noted that domestic restructuring efforts at the company could become EPS-accretive by FY28–29. He sees strong potential in Hindustan Zinc, Hindalco, JSW Steel, and Jindal Steel & Power, pointing out that U.S. rate cuts should support Hindalco’s Novelis operations. He cautioned that global markets remain vulnerable to Chinese dumping but added that “domestic plays look good.” On Vedanta, he acknowledged that the stock is undervalued but added that its promoters make the situation “tricky.”
Overall, Kant’s assessment suggests a divided market landscape. IT continues to grapple with structural disruption despite repeated rate cuts. Aviation is facing a challenging few quarters amid operational and regulatory pressures. Metals, on the other hand, are positioned for a constructive year ahead, supported by domestic demand and improving balance sheets.
