Samir Arora, founder of Helios Capital, is urging investors to avoid cheap Indian IT stocks and instead allocate capital to defence and financials [1, 2].

This shift in strategy highlights a growing divide between traditional service models and the emerging AI economy. As global markets navigate geopolitical tensions and technological disruptions, Arora said that the perceived value of legacy IT firms may be a trap for investors.

Arora said that market uncertainty is often confused with business uncertainty [1, 2]. He said that while traditional IT services are facing a “self-churning trap,” revenues for AI-driven firms are rising [1, 2]. This divergence suggests that the low price of certain IT stocks does not necessarily indicate a buying opportunity if the underlying business model is failing to adapt to new technology.

In addition to AI-driven companies, Arora is betting on the defence and financial sectors [1, 2]. He said that easing oil-price pressures are improving the outlook for these specific areas [2]. The reduction in oil-related risks allows for a more stable long-term wealth creation strategy in these sectors compared to the volatility seen in traditional tech services.

Arora's perspective links these domestic investment choices to the broader U.S.-Iran geopolitical context and global oil prices [2]. By pivoting away from sectors vulnerable to the AI transition and toward those benefiting from macroeconomic stability, he aims to capture growth in new-age companies [1, 2].

“Traditional IT services face a “self-churning trap””

The recommendation signals a fundamental transition in the Indian equity market, where traditional labor-arbitrage IT models are being superseded by AI-integrated business models. By prioritizing defence and financials, investors are hedging against the disruptive nature of artificial intelligence while capitalizing on a stabilizing energy market and increased domestic security spending.