'Narayana Murthy preached R&D to govt, but didn't invest himself': Fund managers after Anthropic shock hits IT stocks

The selloff in Indian IT stocks on Wednesday reignited a long-running debate over whether the country's technology majors have invested enough in research and innovation.

Carnelian Asset Management & Advisors founder Vikas Khemani on Thursday criticised prominent figures in the Indian IT industry for urging governments to spend more on research while failing to deploy their own capital for innovation.

"People like Mr Narayan Murthy, who have preached government all along their life to invest in R&D, has not done anything for R&D despite having billions at their disposal," Khemani said while reacting to a post by Helios Capital founder Samir Arora.

He added that even a modest, structured commitment could have made a difference. "If nothing else, they should have created/inverted every year 2% of their profit in venture funds (internal or external)...this wouldn't compromise their profits, but money which earns 5% in treasure will get to innovation."

Questioning the absence of such initiatives, Khemani said, "Have wondered why these stalwarts have never done it!!!! It's never too late. Time to wake up."

Earlier, Samir Arora argued that Indian IT companies remain overly focused on short-term earnings visibility. He wrote, "Indian IT companies cannot see beyond their nose- they only worry about next quarter's orders and guidance and if there is visibility for that they feel confident."

The veteran fund manager compared this approach with global peers, adding, "Imagine that 3 days ago analysts were celebrating the fact that buyback are a big positive for the industry- at the same time Google announces that their capex budget can double to USD 175 billion in one year."

Arora said the focus on buybacks reflected misplaced priorities. "Our fellows are celebrating that there will be approx. 0.6 pct saving in taxes due to new buyback rules...Earnings don't have to change in one year but PEs can change in a jiffy."

IT stocks came under heavy selling pressure on Wednesday, following an announcement by US-based AI startup Anthropic, which unveiled an end-to-end workflow automation productivity tool.

Explaining the market reaction, Ponmudi R, CEO of Enrich Money, said, "IT stocks faced sharp selling pressure, tracking weakness in global technology shares." He added, "Sentiment in the sector deteriorated after Anthropic unveiled an end-to-end workflow automation productivity tool, rekindling concerns that rapid advances in AI could disrupt traditional software business models and weigh on industry-wide profitability."

Nirmal Bang Institutional Equities described the fall in shares of Infosys, Tata Consultancy Services and other IT majors as a "DeepSeek 2.0 moment". While calling the selloff an overreaction, the brokerage said it also served as a warning. It said Indian IT stocks were hit by global contagion risk rather than any domestic deterioration.