AI a wake-up call, adaptability key as markets navigate volatility, say veteran investors

markets

• AI, market volatility, and sector rotation shape investor outlook
• Adaptability and long-term focus seen as key to market success
• Investors optimistic on India's growth and AI opportunities

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Artificial intelligence, market volatility and sector rotation dominated the discussion as veteran investors shared their views on India’s long-term growth story at the News18 Rising Bharat Summit in New Delhi.

Ramesh Damani, market veteran and long-term investor; Madhu Kela, investor and allocator; and Vijay Kedia, investor and stock picker, speaking at the summit, said while markets are going through a speed bump, the larger Rising Bharat narrative remains intact, with change and adaptability shaping the next phase.

AI Concerns and Market Reaction

Damani said recent weeks have been dominated by concerns around AI and whether it could disrupt the technology sector. He said technological change is not new and referred to earlier phases of computerisation in India, noting that markets evolve and expand with new technology.

He said that while AI represents a profound change, markets may be overreacting. There will be new winners and losers, but adaptability will determine survival, he said, citing the idea that the species most adaptable to change survives. He added that outside the technology sector, he continues to see companies expanding and remaining optimistic.

Kela said everyone today has a view on AI and the pace of change is extremely fast. He said technological shifts over decades have not made societies poorer, but have created clear winners and losers. Companies that adapt to change will succeed, while others may shrink despite being large and significant.

He described the current phase as a wake-up call, saying ignoring it would not be prudent. While short-term employment disruptions may occur due to rapid change, he said he remains optimistic over the medium to long term and believes India has the capability to become a significant AI solutions provider.

Damani added that new-age AI companies continue to use established enterprise software providers, indicating that coexistence is possible. He said fears of widespread jobless growth may be overstated.

Market Cycles and Investor Sentiment

Addressing recent investor disappointment, Damani said equity returns are not linear and periods of strong gains are often followed by phases of consolidation. Returns are lumpy by definition, he said, and investors must evaluate performance over longer cycles. He pointed to sector rotation, with areas such as defence, materials and domestic manufacturing showing strength amid global trends towards localisation and self-reliance.

Kela said investors can choose different reference points to judge returns. While the last 18 months have seen limited gains and corrections in smaller companies, he said such phases have historically offered opportunities. He noted that several companies have seen sharp price corrections and valuation contraction even as earnings have adjusted, and said selective accumulation during such periods has, in the past, led to meaningful returns.

Multibaggers and Long-Term Themes

Kedia said opportunities to identify multibaggers continue to exist across cycles. He reiterated that bullish phases may not always be visible at the index level but exist across individual stocks.

Kela said companies that use AI to enhance efficiency or reduce costs could emerge as long-term beneficiaries. Damani pointed to infrastructure, pharmaceuticals and metals and minerals as sectors less directly affected by AI-related uncertainty in the near term.

The investors said adaptability, selective stock picking and a long-term approach remain central as markets navigate technological shifts and cyclical changes.