“In three to four years, you essentially probably would start to see that impact with respect to wage deflation as more people seek jobs which are not available,” he said.
Garre said the slowdown in hiring will not be confined to IT services and will instead cut across a wide range of white-collar work. He said this could eventually weigh on consumption.
Whether the damage can be contained depends on how companies choose to deploy the productivity gains AI generates — through share buybacks and investor payouts, reinvestment into new growth, or lower prices for products and services. “It’s still too early to take a call on how that shapes up,” Garre said.
Garre said India is among the top users of AI globally by usage, not just user count, ranking second after the United States when China is excluded from the comparison — a point he attributed largely to the dominance of US large language models in current usage data.
Bernstein’s view on markets has not shifted much over the past six to seven months. After the April-June 2026 quarter fall, there were expectations of modest positive returns for the year, with the Nifty ending flat near 26,000. But that target now looks difficult to reach given current levels, though Garre is holding on to it.
He flagged that gains from government policy actions in the first half, particularly around consumption, may not repeat in the second half as year-on-year comparisons get tougher.
Bernstein has shifted toward quick commerce and away from some traditional retail names in terms of sector perspective. He said the shift reflects a preference for business models less dependent on India’s broader consumption growth, since quick commerce still has room to expand through new dark store additions.He also pointed to execution track record and reduced fundraising competition among smaller players as factors supporting the space, while noting quick commerce growth is likely to weigh on physical retail in urban areas over time.
The financial sector is among the top themes, with improved liquidity that could support credit growth.
However, an unstable oil and West Asia backdrop and a heavy pipeline of fundraising in India, could pressure overall market valuations. Return dispersion across stocks is at its widest in years, he said. This means gains are increasingly concentrated in individual stock picks rather than broad market moves.
For the full interview, watch the accompanying video
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