Sankaran Naren on IT Stocks: Why the ICICI Prudential CIO Says Avoid Going All-In Amid AI Uncertainty, What It Means for TCS, Infosys and HCL Tech Investors Before Q2 Results, and How to Size an IT Allocation
- October 6, 2026
- Posted by: Ankit Jaiswal
- Category: News
Sankaran Naren on IT: attractive in places, but AI makes long-term outcomes hard to quantify, so size it. Nifty IT down 25% YTD. TCS reports 8 Oct. Accenture FY27 guide 3-6%.
Quick Answer
Sankaran Naren on IT stocks, as reported this week, is a measured stance: ICICI Prudential AMC’s CIO says Indian IT looks attractively priced in places, but the structural shifts from AI make long-term outcomes difficult to quantify, so investors should avoid going all-in. He has also warned that many global AI-linked stocks are priced for perfection and has favoured diversification across gold, private banks and insurers. The sector has fallen about 25% this year to a Nifty IT level near 28,250, and TCS reports on 8 October with Accenture’s 3% to 6% FY27 outlook providing only a modest lift because its organic growth is about 0.75% to 3.75%. For investors, the practical message is to size an IT allocation deliberately, spread it across names and time, and keep it part of a diversified portfolio.
Sankaran Naren on IT stocks is in focus as Indian IT heads into the September-quarter results season. The executive director and chief investment officer of ICICI Prudential AMC has been cautious on AI-linked valuations and advocates diversification, while noting that Indian IT is not uniformly expensive, which is why his advice is to avoid an all-in bet.
If you are searching for what Sankaran Naren says about IT stocks, this article covers his reported views on AI uncertainty, his contrarian approach and preference for private banks and gold, his focus on asset allocation, why AI makes IT outcomes hard to forecast, how the sector has performed, the Accenture read-through, the TCS and HCL Tech results dates, a framework for sizing an IT allocation, and the risks. His remarks are from reports and not a transcript, so check the original interviews.
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What Sankaran Naren Has Said: Sankaran Naren on IT Stocks and AI
| Theme | Reported view | Date |
|---|---|---|
| Indian IT valuation | Attractively priced in some areas, but low multiples alone are not enough | 2 October report |
| AI uncertainty | Structural shifts from AI make long-term outcomes difficult to quantify, so take a measured approach | 2 October report |
| Global AI stocks | Many are priced for perfection and are vulnerable to sharp corrections if growth assumptions fail | 2 October report |
| Where he sees value | Private banks and insurers, which he expects to deliver steady earnings | 2 and 5 October |
| Diversification | Mix assets, keep gold as a steady holding, be careful with overseas investments after their run | 5 October |
| Indian small and mid caps | Getting expensive, though some still grow faster than large caps | 5 October |
Sankaran Naren has also said that if the global AI boom cools, India could attract more investors. These are paraphrases of press reports, and the exact words on IT came in interviews that you should read in full before relying on them.
Why AI Uncertainty Makes an All-In Bet on IT Risky, Says Sankaran Naren
- AI can deflate revenue: ICICI Direct research from earlier this year estimated that AI productivity could cut traditional IT services revenue by about 2% to 3% a year for a couple of years.
- AI can also expand the market: the same research sees an incremental AI-led opportunity of $300 billion to $400 billion by 2030, and it may be dated.
- The balance between the two is unknown, so earnings forecasts carry a wide range.
- Guidance is already low: Infosys and HCL Tech guide to low single-digit growth, and large caps are growing about 0.5% to 3% in Q2.
- Valuations have fallen, but low multiples can stay low if growth keeps being cut.
This is the logic behind Sankaran Naren’s measured approach: the sector is not obviously overpriced, but the range of outcomes is wide enough that concentration can hurt.
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Where Indian IT Stands Before Q2 Results as Sankaran Naren Urges Balance
| Measure | Level | Note |
|---|---|---|
| Nifty IT index | About 28,250 | Down more than 25% in 2026 |
| Accenture FY27 guidance | 3% to 6% in local currency | Organic growth of about 0.75% to 3.75% |
| TCS Q2 results | Thursday, 8 October | Expected constant-currency growth near 0.5% |
| HCL Tech Q2 results | Monday, 12 October | Guidance narrowing to 2% to 4% services growth expected |
| Infosys Q2 results | 27 October | Possible trim at the top of guidance |
| Brokerage views | Split | From Add and Buy at Motilal Oswal and JM Financial to Sell at Nirmal Bang |
Brokerages expect only about 1.7% sequential constant-currency growth for the sector in Q2, which is why many experts urge investors to focus on deal conversion and margins more than headlines.
How to Size an IT Allocation Instead of Going All-In: Sankaran Naren’s Caution Applied
| Principle | What it means in practice |
|---|---|
| Know your current weight | IT is roughly 10% of the Nifty, and many diversified funds already hold it, so check total exposure before adding |
| Cap single-sector exposure | One fund manager has suggested sector funds should not exceed about 5% of an equity portfolio, a rule from earlier in the cycle, within your overall asset allocation |
| Spread across names | Combine large caps such as TCS with mid-caps, and avoid one company carrying the thesis |
| Spread across time | Build positions in tranches around results, not in one lump sum |
| Match horizon | AI outcomes take years, so money needed soon should not sit in a single theme |
| Rebalance | Trim when IT grows beyond its planned weight and add when it falls below |
These are general frameworks and not Sankaran Naren’s prescription. Position limits depend on your goals and risk tolerance, so use them as starting points for discussion with an adviser.
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What Else Sankaran Naren Favours, and Why It Matters for IT Investors
Sankaran Naren’s recent comments lean towards private banks and insurers, gold as a steady asset and caution on expensive small and mid caps and on overseas assets after their run. ICICI Prudential’s Contra Fund NFO, open until 12 October, reflects a contrarian approach of looking at out-of-favour areas, which can include IT, but he stresses margin of safety and asset allocation over chasing a single theme.
Risks of Both Extremes in IT Stocks
Going all-in: A concentrated IT bet goes against Sankaran Naren’s measured approach and is exposed to AI deflation, weak US demand and guidance cuts at the same time.
Avoiding IT completely: IT has a low weight in the index and cash-rich companies, so a rebound would be missed if AI fears fade.
Timing around results: TCS on 8 October and HCL Tech on 12 October can move the sector sharply.
Rupee and US macro: The rupee near 96 and US policy affect margins and demand.
Second-hand views: Press paraphrases of Sankaran Naren can miss nuance, so confirm views from the original source.
What to Watch Next for IT Stocks
- TCS Q2 results on 8 October: deal wins, margin and demand commentary.
- HCL Tech guidance on 12 October and Infosys on 27 October.
- Whether companies show AI revenue that offsets deflation.
- Guidance cuts, which BofA says are still likely across the sector.
- The ICICI Prudential Contra Fund NFO close on 12 October and any further commentary from Sankaran Naren.
Conclusion
Sankaran Naren on IT stocks is a call for balance: Indian IT looks attractively priced in places, but AI makes long-term outcomes hard to quantify, so an all-in bet is risky. With the Nifty IT index down about 25% and TCS reporting on 8 October, investors can size an allocation deliberately, spread it across names and time, and keep it within a diversified portfolio, which is the heart of what Sankaran Naren advises. Consult a SEBI-registered advisor before making any decision.
Disclaimer: Data and figures in this article are sourced from publicly available information. These may or may not be accurate. Please verify all data with the official NSE (nseindia.com) and BSE (bseindia.com) websites before making any investment decision. Investments in securities are subject to market risk. This content is for educational purposes only and is not investment advice by Univest (SEBI RA INH000013776).
Frequently Asked Questions
What does Sankaran Naren say about IT stocks?
Ans. Reports say Sankaran Naren sees Indian IT as attractively priced in places but notes that AI makes long-term outcomes hard to quantify, so he advises a measured approach and not going all-in.
Why avoid going all-in on IT stocks?
Ans. Sankaran Naren’s concern is that AI could cut traditional IT services revenue while also creating new demand, and the net effect is uncertain, so concentration adds risk.
What else does Sankaran Naren favour?
Ans. Diversification, gold as a steady holding, private banks and insurers, and caution on expensive small and mid caps and overseas assets.
How has Indian IT performed this year?
Ans. The Nifty IT index is down more than 25% in 2026 and trades near 28,250.
When do TCS and HCL Tech report?
Ans. TCS reports on 8 October and HCL Tech on 12 October, with Infosys on 27 October.
How much IT should I hold?
Ans. Sankaran Naren does not give a number in the reports. Check your total exposure, spread across names and time, and keep sector weights within your asset allocation plan.
What is the ICICI Prudential Contra Fund?
Ans. It is an NFO from Sankaran Naren’s fund house, open from 28 September to 12 October 2026, that follows a contrarian approach to out-of-favour areas.
Is this article investment advice?
Ans. This article does not constitute investment advice, and it paraphrases Sankaran Naren from press reports. Consult a SEBI-registered financial advisor before investing.
