Pankaj Tibrewal on AI, Capital Markets, and Investment Focus for 2026
The Indian investment landscape is experiencing a dynamic transformation. According to Pankaj Tibrewal from IKIGAI Asset Managers, midcap IT firms, private banks, and hard assets are emerging as significant areas of interest for investors. In his recent conversation with ET Now, he shed light on sectoral trends, capital market opportunities, and the expanding role of AI in Indian IT services.
Midcap IT Outperformance
Tibrewal pointed out a key distinction in the growth trajectories of largecap versus midcap IT firms:
– Large IT Companies: Growth momentum is moderate, with single-digit expansion, although margins remain stable.
– Midcap IT Firms: Positioned for more aggressive growth, likely reaching double digits thanks to agility, AI adoption, and strong client acquisitions. Despite higher valuations, the potential for rapid growth justifies the investment.
AI Transition in Indian IT
Expressing cautious optimism, Tibrewal commented on the future of AI adoption:
– Investment in Disruption: He noted that Indian IT firms have historically underinvested in new technologies. While larger companies may face challenges in pivoting to AI, smaller players are more likely to embrace this focus effectively.
Capital Markets and Non-Lending Opportunities
Tibrewal highlighted the performance of non-lending plays:
– Strong Numbers: Asset Management Companies (AMCs), depositories, exchanges, and distribution platforms have shown remarkable performance this quarter, even with limited mark-to-market gains.
– Long-Term Benefits: He believes these franchises will benefit significantly from a rising market over the next three to five years.
Positive Outlook for Private Banking
On the subject of private banking, Tibrewal stated:
– NIM Contraction: It appears to be behind us, paving the way for private banks to experience growth of about 20% in FY27.
– Earnings Potential: Although this year may be focused on consolidation, he anticipates earnings growth will resume as deposit rates are repriced.
Metals and Hard Assets Investment
Tibrewal remains bullish on hard assets due to:
– Geopolitical Supply Constraints: Commodities are now being viewed as geopolitical tools with their supply concentrated in a few countries.
– Long-Term Demand for Metals: He highlighted that the demand for copper in the next 18 years could equal what was mined in the previous 10,000 years, indicating that metals like copper and aluminum will continue to be in tight supply, thus stabilizing or increasing prices.
Market Breadth and Index Recovery
Despite underlying optimism in specific sectors, Tibrewal acknowledged a mixed index-level performance:
– Small and Midcaps: These segments have been inactive for the past 15-16 months. While the NSE 500 index is near its highs, the market breadth appears weak.
– Future Earnings Growth: He projects that earnings growth will transition into double digits next year, led by banking, autos, and power sectors, potentially driving markets higher. Resuming FII (Foreign Institutional Investor) buying could also boost market sentiment.
Pankaj Tibrewal’s insights suggest that while largecap IT companies and midcaps may have divergent growth paths, private banking, capital markets, and hard assets are well-positioned to benefit from ongoing structural changes. This presents unique opportunities for investors willing to be patient and strategic in their choices for 2026.