IT stocks: Shriram Life CIO Ajit Banerjee explains his contrarian view

Shriram Life Insurance is adopting a contrarian positive stance on the Indian information technology (IT) sector as companies recalibrate their operations to prioritise artificial intelligence (AI) and cloud services, according to President and Chief Investment Officer Ajit Banerjee.

Speaking to CNBC-TV18, the CIO noted that while the sector faced significant concerns a year ago, the industry is now undergoing a major transition. “If you see some of the large companies, largest ones rather, they are reporting a line at specifically for the AI, which means that they have accorded a top priority because they need to recalibrate themselves,” Banerjee explained, highlighting ongoing manpower reskilling and a growing focus on cybersecurity and cloud infrastructure.

On the broader market, the life insurer maintains a strict policy of avoiding initial public offerings (IPOs), preferring to wait until newly listed stocks settle. Addressing the highly anticipated listing of the National Stock Exchange (NSE), the firm will only consider an investment if the exchange is incorporated into the Nifty 150, which serves as its exclusive investment universe. The pre-listing hype and the amount of liquidity blocked during public issues make the space less attractive for immediate entry.

Within the fintech space, the implementation of the merchant discount rate (MDR) is viewed as a necessary step to fund continuous technology upgrades. Supporting the scale of digital transactions requires substantial backend infrastructure and bandwidth, which necessitates financialisation. While the charges currently apply to merchants with caps on large transactions, the ultimate market impact will depend on how merchants adjust their pricing.

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In the traditional financial sector, Shriram Life Insurance remains confident in large private banks, select public sector undertakings (PSUs), and diversified non-banking financial companies (NBFCs). Recent succession issues at private banks are not a major concern, as these institutions have performed consistently and are viewed by the Reserve Bank of India (RBI) as too large to fail. Additionally, the fund is positive on the capital and industrial sectors, driven by India’s push for defence localisation and shipbuilding, which demand significant capital expenditure.

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