As the earnings season unfolds, India’s top IT companies have delivered a mixed set of results, reflecting both near-term pressures and longer-term structural shifts. With major players having reported their quarterly numbers, market participants are now reassessing sectoral strategies amid global uncertainties and evolving industry dynamics.

Speaking to ET Now, market expert Sandip Sabharwal offered a measured view of the current landscape, highlighting the challenges facing the IT sector and the broader market.

“Overall, the results have been muted. Some companies have disappointed more than others. So, HCL Tech disappointed I guess the most in terms of what they reported and guidance. Infosys also has been soft. TCS, as we look at all the results combined now, TCS seems to have fared the best and both in terms of what they reported and the order flows which they have got, but the industry is obviously challenged,” Sabharwal said.

He pointed to a deeper transformation underway in the IT industry, driven by the shift toward artificial intelligence-led delivery models.

“The transition phase to AI driven delivery from purely numbers-led delivery in terms of hours of manpower, that transition is on, which could lead to subdued growth for this year and maybe possibly next year also and then it will be a question of which companies are able to transform and they will then do well,” he added.

Despite the subdued growth outlook, valuations have become more reasonable. “Valuations overall are not very expensive now because Infosys, for example, trades at just around 15 times earnings which is a level which has been more near a historical turf, but at that time the growth prospects are also greater. But given the fact that they are cash generating, the downside also could be limited. So, it is a picture where you do not see much upside but there could also not be substantial downside,” he noted.

Structural Challenges Weigh on IT
When asked whether investors should avoid IT stocks altogether, Sabharwal leaned toward caution.

“Largely yes, because although all sectors are getting challenged right now because of whatever is happening on the oil and commodity front and potential inflation impact, but IT is a sector which is facing structural issues. So, other sectors might be facing short-term issues due to short-term factors, but this is a sector facing structural issues so that is the main problem,” he said.

A Market for Selective Buying
The broader market, too, is navigating a delicate balance between optimism and uncertainty. While geopolitical tensions and commodity price volatility remain concerns, there are also signs of stability.

“We were aggressive buyers in March but right now I would be very-very selective. So, I would not be a big buyer today because of the sheer rally which has happened and the markets actually seem to be positioned not only in India but globally also on an end game, like the conflict ending in one way or the other,” Sabharwal observed.

He also flagged crude oil prices as a key risk factor for the Indian economy. “The second thing is obviously the oil prices which impact the Indian economy in a significant negative manner if they sustain at such high levels,” he said.

Going forward, he suggests a selective approach, particularly in sectors like automobiles where corrections could create opportunities.

Reliance: A Mixed Outlook
All eyes are also on Reliance Industries as it prepares to announce its results. However, Sabharwal cautioned that forecasting performance may be difficult this quarter.

“Reliance numbers are very tough to call this time because retail and telecom should do fine. But what numbers will come out of oil to chemicals business is very-very tough in the face of whatever has happened in terms of crude prices, export duties being imposed, etc, so that is a segment which I find it very difficult to call,” he said.

Still, he believes the company remains reasonably valued from a long-term perspective.

Financials Remain a Bright Spot
In contrast to IT, the banking and financial sector has shown resilience, supported by strong asset quality.

“Yes, banking and financial numbers have been fine. So, the biggest positive I see in most large financial companies, banks and NBFCs combined is the sheer strength of the asset quality of the book where the asset quality has not deteriorated at all,” Sabharwal said, citing examples such as ICICI Bank and HDFC Bank.

However, he acknowledged emerging risks, including potential interest rate hikes and concerns over inflation and monsoon trends.

Metals May Continue to Shine
Among sectors that could benefit from the current macro environment, metals stand out.

“Yes, metal prices could sustain, as such metal stocks could sustain because there are disruptions related to production and as well as price upticks due to the input prices moving up,” Sabharwal explained.

He added that inflationary conditions typically favor such sectors, with steel companies in particular benefiting from recent price increases.

Key Takeaways
As earnings season progresses, the market narrative is increasingly defined by divergence—between sectors facing structural disruption and those benefiting from cyclical or macroeconomic tailwinds. While IT may remain under pressure in the near term, financials and metals offer relative stability. For investors, the message is clear: this is not a time for broad bets, but for careful, selective positioning.