IT Bottom Still Far? Gautam Shah’s Big Warning On IT Stocks, Nifty Stuck & PSU Banks Rally | ET Now
•February 25, 2026
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Why It Matters
A deeper IT decline could erode investor confidence in a traditionally strong growth driver, while the shift toward PSU banks and commodities offers new profit opportunities for portfolio managers.
Key Takeaways
- •Nifty IT index could drop to 26,000 levels
- •AI disruption pressures Indian IT valuations
- •PSU banks expected 25‑30% upside
- •Metals and energy sectors poised for strong gains
- •Market likely rotating rather than collapsing
Pulse Analysis
The Indian IT sector, long a cornerstone of the country's equity market, is now confronting a dual challenge: rapid AI integration and a reassessment of legacy business models. As multinational clients re‑evaluate outsourcing spend and prioritize AI‑enabled services, many firms face compressed margins and heightened competition. This structural shift has prompted analysts to trim earnings forecasts, driving the Nifty IT index toward historically lower levels and prompting investors to scrutinize valuation multiples more closely.
At the same time, policy‑driven credit growth and fiscal support are buoying public‑sector banks, while global commodity demand fuels metals and energy equities. PSU banks benefit from higher deposit inflows and government-backed loan books, positioning them for a 25‑30% rally according to Shah. Metals and energy firms are riding a tailwind of infrastructure spending and rising oil prices, offering a counterbalance to the IT slowdown and diversifying the market's performance drivers.
For investors, the emerging rotation signals a need to recalibrate risk exposure. Allocating capital toward sectors with strong fundamentals and policy tailwinds can mitigate the downside from IT volatility. Moreover, monitoring AI adoption curves and valuation trends will be crucial for timing re‑entries into the technology space. Overall, the market appears to be reshaping rather than collapsing, presenting disciplined investors with selective opportunities across banking, commodities, and emerging tech domains.
Original Description
Is the IT selloff structural? According to Gautam Shah, Founder of Goldilocks Global, the Nifty IT index may see further downside toward 28,400-26,000 levels. While IT struggles under AI disruption and valuation reset, PSU banks, metals, and energy stocks could deliver 25-30% upside. Is this a market of rotation rather than collapse? Here’s the full strategy outlook.
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