Nilesh Shetty Loads Up on IT Stocks, Warns Middle East War Threatens India

Nilesh Shetty, once an outspoken bull on India, has shifted to caution and is advising clients to hold back as geopolitical risk from the Middle East intensifies.

“Nilesh Shetty turns cautious on India, but is loading up on IT stocks at COVID-level calculations Synopsis Nilesh Shetty of Quantum Advisors shifts from bullish to cautious on India due to Middle East conflict”

Economic Times

Until recently, Shetty had been urging clients to go overweight on India and equities broadly, citing a nearly ideal macro setup — GST-driven consumption recovery, low inflation, and low interest rates all converging.

The Economic Times

However, “the war changed that calculus,” prompting him to reassess positioning amid heightened external risks and potential economic spillovers.

Shetty warns the Middle East conflict poses clear risks to India’s macroeconomic tailwinds because of deep exposure to the region through crude oil, fertilisers, and remittances.

He warned that if the fighting prolongs “the low-inflation, low-rate environment that has underpinned India's growth could reverse quickly.”

The Economic Times

He has also flagged early signs of stress such as reported gas supply disruptions to industries, which he described plainly as “a big worry for India.”

Against that backdrop, Shetty is selectively increasing exposure to IT stocks, arguing the valuation case is compelling: many IT names are “trading at multiples that, in Shetty's assessment, match their COVID-era lows — with dividend yields of 4–5% on businesses generating substantial free cash flow.”

“Nilesh Shetty turns cautious on India, but is loading up on IT stocks at COVID-level calculations Synopsis Nilesh Shetty of Quantum Advisors shifts from bullish to cautious on India due to Middle East conflict”

Economic Times

That contrasts with sectors he avoids — consumer staples, where he has had zero allocation for 12 years and notes valuations still sit at “70–80x earnings.”

He also says capital goods and industrials have not corrected enough to meet his valuation bar.

Shetty's current playbook is patient and selective: stay cautious on broad India until geopolitical clarity returns, build positions in IT and financials where valuation opportunities have emerged, and continue to avoid overvalued staples.

His stance combines valuation-driven stock selection with an overlay of macro and geopolitical risk-awareness.

The Economic Times

This reflects how the Middle East war has materially altered the investment calculus that formerly supported a broad pro-India stance.