"Rather than worrying about a valuation we need to think about growth... we are just simply bringing them into a valuation trap." - Rajiv Batra (Discussing why 10-year average valuations in IT are misleading without corresponding growth) 00:04:15
"History shows there is still a substantial downside even from here on [for tech majors]." - Rajiv Batra (On the outlook for software and tech companies amid AI disruption) 00:04:34
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"Fed goalpost is generally not just unemployment and inflation... the third goalpost is also asset pricing." - Rajiv Batra (On potential policy intervention if market disruption continues) 00:06:03
"We saw a broad-based earning growth across large cap, midcap, and small cap." - Rajiv Batra (Summarizing the Q3 earnings season in India) 00:07:43
" If this continues at a global level for longer... [India or China] will start becoming a refuge for people running away from tech AI-driven themes." - Rajiv Batra (On the shift toward stable domestic demand themes) 00:09:09
Executive Summary
The discussion centers on the current global momentum drawdown, where even AI beneficiaries and hyperscalers are being sold off as the market shifts focus from capex spending to actual earnings realization. Rajiv Batra warns that the Indian IT sector may be a valuation trap, trading at 19x PE despite negligible 2% earnings growth. Conversely, he expresses optimism for India’s broader market, noting that robust earnings in mid-cap and small-cap sectors, combined with currency stability and trade deals, are likely to draw Foreign Institutional Investors (FIIs) back.
Key Takeaways
Momentum Drawdown Timeline: The current global sell-off has hit a 2-week median duration, but historical cycles suggest it could extend to 4-5 weeks before stabilizing 00:05:45.
The IT Valuation Trap: Despite recent corrections, Indian IT stocks trade at a 19x PE while delivering only 2% earning growth, creating an unsustainable PEG ratio00:04:00.
AI Disruption Shift: Markets are no longer rewarding high capex for AI; they are now demanding evidence of user adoption and bottom-line growth00:02:22.
Broad-Based Recovery: Unlike previous quarters where small caps lagged, the most recent quarter saw a recovery across all tiers: 9% growth for Large Caps, 12% for Midcaps, and 18% for Small Caps 00:07:43.
India as a "Safe Haven": If global tech volatility persists, investors are expected to rotate into domestic demand hubs like India, supported by the "China Plus One" strategy and new free trade agreements 00:09:15.
Detailed Summary by Topic
The Global Tech and AI Correction
The market is undergoing a significant momentum drawdown affecting AI beneficiaries, hyperscalers, and software stocks. Batra explains that the "root cause" is a shift in investor sentiment: the market is no longer cheering for companies simply because they are spending on AI. Instead, there is a growing concern regarding sustainable terminal growth rates. If LLM (Large Language Model) models can increase adoption at a cheaper rate, traditional software companies may face long-term disruption. 00:01:59
Indian IT: Valuation vs. Reality
Comparing the current cycle to the 2012-2013 "internet enigma" period, Batra notes that Indian IT companies then traded at 14-15x PE. Today, they sit at 19x PE. He critiques the "deep value" argument by pointing out that the MSCI India IT sector's earning growth was a meager 2% last quarter. He warns investors not to be enticed by 10-year average valuations if the underlying growth doesn't justify the price. 00:03:11
Macro Stability and FII Sentiment
Batra highlights that FIIs are looking for stability and growth trade-offs. India’s story is becoming more attractive due to currency stability (the Rupee holding firm) and the reduction of the India Risk Premia following potential trade deals with the US. He also points to the nine free trade agreements and the China Plus One theme as catalysts for higher FDI and exports. 00:08:19
Earnings Performance in Broader Markets
The recently concluded earnings season was surprisingly "broad-based." While top-line revenue growth for MSCI India was around 11%, the mid-cap and small-cap segments showed significant resilience. Small caps, which had been lagging for two quarters, returned to 18% earning growth, suggesting that the recovery is no longer just about margin expansion but also healthy top-line demand. 00:07:43
Data & Figures
Data Point
Value
Context
MSCI India IT PE Ratio
19.5x
Current valuation despite recent market correction 00:03:41
MSCI India IT Earning Growth
2%
Actual growth recorded in the last quarter 00:04:00
Small Cap Earning Growth
18%
Growth rate for small-cap companies in the latest quarter 00:08:04
Midcap 100 Earning Growth
12%
Growth rate for the MSCI India Midcap index 00:07:58
MSCI India Revenue Growth
11%
Top-line growth across the broader Indian market 00:08:11
Stories & Anecdotes
The Spotify Metric: The host references Spotify stating that their best coders haven't written a single line of code since December due to AI efficiency. This illustrates the "ripple effect" of AI disrupting not just tech, but wealth management, legal tech, and real estate 00:04:42.
The 2012-13 Parallel: Batra recalls the period when global markets were obsessed with the "internet enigma." India lacked many internet names at the time, and disruptive industries went through a 6 to 7-year long valuation derating00:03:11.
References & Recommendations
JPMorgan IT Analyst Note: Referenced as suggesting IT valuations are "screaming deep value," a point Batra disputes 00:00:30.
Macquarie: Analysts there are reportedly "buying aggressively," expecting PE ratios to rerate upwards by FY2700:00:56.
MSCI India IT Sector Index: Used as the primary benchmark for the discussion on IT valuations 00:03:41.
US Supreme Court / AIPA: Mentioned in the context of upcoming legal rulings that could impact market sentiment regarding tariffs and tech 00:10:02.
Speakers & Credentials
Rajiv Batra: Head of Asia and Co-head of Global Emerging Markets Equity Strategy at JPMorgan.
Prashant Nair, Reema Tendulkar, & Nigel D'Souza: Hosts from CNBC-TV18 who provide the context for local Indian market movements and FII data.
Actionable Next Steps
Avoid the IT "Valuation Trap": Exercise caution with Indian IT majors until earnings growth accelerates beyond the current 2% level to justify a 19x PE.
Monitor the 5-Week Window: Watch global momentum for another 2-3 weeks; if the drawdown exceeds the 5-week mark, it may signal a deeper structural shift rather than a technical correction.
Rotate to Domestic Demand: Consider shifting focus toward sectors benefiting from India’s 11% top-line growth and domestic demand, such as mid-caps and small-caps that have shown a recent "basing out" and recovery.
Jul 13, 2026
Yanis Varoufakis | Closing Keynote | Thursday 18th June 2026 | Web3 Foundation
"Politics is who does what to whom... who has the power to do to make you do stuff." Yanis Varoufakis 00:02:36 https://youtu.be/WZeuKyUs9hM?t=2m36s "We have created machines and machinery—network machines—that are not produced means of pro…
Historical IT PE (2012-13)
14-15x
Comparison point for current IT valuations 00:03:34
Momentum Drawdown (Max)
4-5 weeks
Historical maximum period for these types of market phases 00:05:45