Consumer-focused firms could be leaders of next market upcycle, says Standard Chartered Securities CIO Gaurav Dua
AI could fast track digital transformation of enterprises and that could be a very large opportunity for software services companies, he says
- Feb 26, 2026,
- Updated Feb 26, 2026 5:50 PM IST
Equity investors have had a roller-coaster ride over the last few sessions with the Sensex and Nifty 50 seeing wild swings amid renewed US trade tariff uncertainty and a sell-off in the shares of software exporters over concerns that their business will be significantly affected as artificial intelligence (AI) gains more traction.
Gaurav Dua, Chief Investment Officer of Standard Chartered Securities, feels software services companies will be forced to fine-tune their business models and there will be winners and losers in this AI-driven transition phase. However, he believes there could be big opportunities as enterprises look to transform their operations and the companies will come out “stronger”, although there will be some “transition pain”.
“This time, AI will take away some of the low-end mundane work, but the advent of AI will also prompt global companies to fast track their digital transformation journey. They will have to do away with their legacy systems and that could be a very large opportunity for software services as a space,” said Dua in an interaction.
He pointed out that the IT industry had transformed itself multiple times, from enterprise software package implementation to quality assurance to infrastructure management, cloud computing and digital transformation. It has moved away from pure coding.
Standard Chartered Securities is advising its clients holding IT stocks to not exit in what he calls a “panic fall”. He noted that the oversold position currently was worse than even during the global financial crisis. He believes there will be exit opportunities down the line and there will also be stocks that will gain from the transition.
Dua says investors must watch out for and ride business cycles carefully and realign portfolios accordingly in their investing journeys.
Over the last few years, capital goods stocks rallied sharply amid the huge government driven push for infrastructure development. Now, Dua believes consumer companies may be the next big drivers of the market, in the backdrop of the income tax cuts, GST overhaul and the expected rollout of the eighth pay commission for government employees. In the past, pay commission awards have led to a significant boost in consumption.
“Portfolios need to be realigned by taking some money off the table from the investment-led sectors and increasing exposure to consumption-led ones,” stressed Dua.
He added that if consumption picks up and interest rate cuts are behind us, then financial services companies could also start doing better.
“[There has been a shift], where consumption and financial companies were lagging the market rally from 2021 to 2024, and have actually started outperforming and probably will be the leaders of the next market up cycle,” said Dua.
Standard Chartered Securities advises a hybrid investing approach to its clients. This includes a top-down approach looking at economic as well as sector cycles and a bottom-up approach beyond the core portfolio, seeking stocks that are likely to benefit.
“We use the best of both worlds, in terms of building a core portfolio by top-down investing, where we are investing in top 100-200 stocks using the sectoral cycle approach, along with bottom-up stock picking and we normally focus on NSE 500 stocks," he noted.
Dua also advocates having investments in gold but doesn’t recommend silver, since it tends to be “extremely volatile”.
Equity investors have had a roller-coaster ride over the last few sessions with the Sensex and Nifty 50 seeing wild swings amid renewed US trade tariff uncertainty and a sell-off in the shares of software exporters over concerns that their business will be significantly affected as artificial intelligence (AI) gains more traction.
Gaurav Dua, Chief Investment Officer of Standard Chartered Securities, feels software services companies will be forced to fine-tune their business models and there will be winners and losers in this AI-driven transition phase. However, he believes there could be big opportunities as enterprises look to transform their operations and the companies will come out “stronger”, although there will be some “transition pain”.
“This time, AI will take away some of the low-end mundane work, but the advent of AI will also prompt global companies to fast track their digital transformation journey. They will have to do away with their legacy systems and that could be a very large opportunity for software services as a space,” said Dua in an interaction.
He pointed out that the IT industry had transformed itself multiple times, from enterprise software package implementation to quality assurance to infrastructure management, cloud computing and digital transformation. It has moved away from pure coding.
Standard Chartered Securities is advising its clients holding IT stocks to not exit in what he calls a “panic fall”. He noted that the oversold position currently was worse than even during the global financial crisis. He believes there will be exit opportunities down the line and there will also be stocks that will gain from the transition.
Dua says investors must watch out for and ride business cycles carefully and realign portfolios accordingly in their investing journeys.
Over the last few years, capital goods stocks rallied sharply amid the huge government driven push for infrastructure development. Now, Dua believes consumer companies may be the next big drivers of the market, in the backdrop of the income tax cuts, GST overhaul and the expected rollout of the eighth pay commission for government employees. In the past, pay commission awards have led to a significant boost in consumption.
“Portfolios need to be realigned by taking some money off the table from the investment-led sectors and increasing exposure to consumption-led ones,” stressed Dua.
He added that if consumption picks up and interest rate cuts are behind us, then financial services companies could also start doing better.
“[There has been a shift], where consumption and financial companies were lagging the market rally from 2021 to 2024, and have actually started outperforming and probably will be the leaders of the next market up cycle,” said Dua.
Standard Chartered Securities advises a hybrid investing approach to its clients. This includes a top-down approach looking at economic as well as sector cycles and a bottom-up approach beyond the core portfolio, seeking stocks that are likely to benefit.
“We use the best of both worlds, in terms of building a core portfolio by top-down investing, where we are investing in top 100-200 stocks using the sectoral cycle approach, along with bottom-up stock picking and we normally focus on NSE 500 stocks," he noted.
Dua also advocates having investments in gold but doesn’t recommend silver, since it tends to be “extremely volatile”.