Zerodha co-founder Nikhil Kamath is focusing on the global energy transition, highlighting potential in electric vehicles and grid infrastructure. He also suggests that Indian IT stocks, despite recent weakness, may now offer attractive value. Kamath noted that foreign investors often mistime their market exits, which could create opportunities for long-term domestic investors.
What Happened
Nikhil Kamath, co-founder of Zerodha, has identified the global energy transition as a major long-term investment theme. He is focusing on sectors critical to energy security, specifically electric vehicles, battery manufacturing, and power grid infrastructure. Alongside this, Kamath has shared a contrarian view on the Indian information technology (IT) sector. While the sector has underperformed the broader market in 2026, he believes that many well-managed IT companies are now trading at valuations that make them attractive for long-term investors.
The Energy Transition Bet
Kamath’s interest in energy stems from increasing geopolitical tensions, which have brought the need for energy security to the forefront. By investing in the energy transition value chain, he suggests that investors can participate in the structural shift toward cleaner, more resilient power systems. This includes companies involved in the production of EV batteries, those managing power transmission, and entities developing grid infrastructure. This sector is seen as a way to benefit from the global pivot away from traditional fossil fuel dependence.
Why The Contrarian View On IT?
The Indian IT sector has faced significant pressure in 2026, with the Nifty IT index seeing a sharp decline from its peak. This performance has been driven by concerns over artificial intelligence disrupting traditional outsourcing models, weak discretionary spending by global clients, and a broader valuation reset. Kamath’s perspective suggests that the market may have overreacted to these short-term headwinds. By viewing the sector as undervalued, he indicates that the current share prices may not fully reflect the long-term earnings potential of established IT services firms, which have historically maintained strong cash flows and operational stability.
FII Selling And The Market Context
Kamath also commented on the behavior of foreign institutional investors (FIIs), who have been net sellers in the Indian market throughout 2026. Data from this year shows that foreign outflows have reached record levels, often driven by global risk-off sentiment and a preference for other markets or asset classes. Kamath observed a historical pattern where overseas funds tend to exit Indian markets when valuations are low and return when prices are already expensive. This cycle often creates temporary volatility, but also provides a window for domestic investors who hold a longer-term horizon to accumulate quality assets.
What Investors Should Track Next
Investors may want to monitor several factors moving forward. In the energy sector, tracking government policy, subsidy updates for EV and battery manufacturing, and the pace of grid modernization will be essential. For the IT sector, the key monitorables are client commentary on spending, the actual financial impact of AI adoption on profit margins, and guidance provided in upcoming quarterly results. While Kamath’s view highlights potential value, the final outcome will depend on whether these companies can adapt their business models to changing global tech requirements and whether the expected demand recovery materializes.