IT Sector May Emerge as Dark Horse of 2026, Says Sunil Subramaniam
Sunil Subramaniam identifies IT as a potential dark horse for 2026 after poor 2025 performance, citing AI investments, currency benefits, and FII flow potential. Real estate could benefit from policy support, GCC expansion, and improved REIT funding. GLP-1 drugs continue driving pharma growth while capex strategy shifts toward private sector enablement.
*this image is generated using AI for illustrative purposes only.
India's information technology sector could emerge as a surprise winner in 2026 after a disappointing performance in 2025, according to market expert Sunil Subramaniam, Founder & CEO of Sense and Simplicity. Speaking to ET Now, he identified IT as a key contrarian investment opportunity alongside real estate, select pharmaceutical themes, and private-sector-led capital expenditure as sectoral leadership broadens.
Subramaniam highlighted early signs of recovery in the IT sector, noting a significant shift in performance trends. The Nifty IT Index, which underperformed sharply over the past year, is already showing reversal signals with contrasting short-term and long-term performance metrics.
IT Sector Performance Indicators
| Timeframe: | Performance |
|---|---|
| One-year returns: | Down double digits |
| Three-month returns: | Up double digits |
| Rupee depreciation impact: | Nearly 7.00% |
Structural Transformation Driving IT Recovery
The IT sector is undergoing a fundamental reset with companies investing aggressively in artificial intelligence capabilities. Subramaniam explained that IT players are either acquiring AI firms or making substantial investments in AI technologies. Simultaneously, companies are restructuring their workforce by retrenching mid-level staff who lack AI readiness while hiring fresh talent with specialized AI skills.
AI consulting is expected to become a major growth driver for the sector in the coming year. The nearly 7.00% rupee depreciation should boost rupee-denominated revenues for export-heavy IT companies, providing near-term earnings support.
From a global investment perspective, the sector could attract foreign institutional investors as US rate cuts are expected. Subramaniam noted that FIIs may prefer IT because it offers a natural currency hedge, with IT earnings typically compensating when the rupee weakens.
Real Estate Positioned for Strong Recovery
Beyond IT, Subramaniam expressed optimism about real estate, which significantly underperformed in 2025 despite strong underlying fundamentals. While housing unit sales moderated, property values continued rising, driven by demand for premium and high-end homes.
The expert expects developers to increasingly pivot towards affordable housing in 2026, aided by lower borrowing costs and reduced GST on building materials. Land acquisition on city outskirts and smaller-ticket projects could drive volumes in the next phase.
| Real Estate Catalysts: | Impact |
|---|---|
| GST cuts: | Reduced construction costs |
| Interest rate cuts: | Lower borrowing costs |
| GCC expansion: | Increased office space demand |
| REIT funding: | Enhanced developer access |
Global Capability Centres expansion in India, triggered by global trade uncertainties and visa-related issues abroad, represents another key tailwind. This GCC growth directly supports corporate real estate demand and reinforces office space requirements.
Improved Funding Environment Through REITs
The funding environment for real estate developers is improving significantly. With REITs gaining equity status, more mutual funds are expected to increase allocations to REITs. Subramaniam anticipates the potential launch of dedicated REIT thematic funds, offering equity taxation benefits with stable income streams. This development should enhance funding access for developers and support sectoral rerating.
Pharma Growth Led by GLP-1 Drugs
In pharmaceuticals, GLP-1 drugs will remain the dominant growth theme in 2026. Subramaniam emphasized India's position as a major obesity market, creating substantial domestic demand for GLP-1 molecules. He described this as a transformative story that will continue driving pharma valuations, suggesting investors need not look beyond this trend for near-term growth triggers.
Capex Strategy Shifts Toward Private Enablement
Regarding infrastructure and capital expenditure, the government is expected to subtly shift strategy from solely driving public capex toward enabling private sector investment. This transition involves public-private partnerships, PLI scheme adjustments, and asset monetization initiatives.
The government aims to maintain stable capex while diverting more resources toward consumption and middle-class support. Roads, logistics, and other PPP-led infrastructure segments could see increased private participation as a result of this strategic shift.
Subramaniam believes 2026 could reward investors willing to take selective contrarian positions, noting that IT, real estate, and certain capex-linked themes have underperformed but show building blocks for recovery. He emphasized that disciplined sector rotation and patience will be crucial for generating alpha in the year ahead.
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