IT, Fintech poised for a comeback as market leadership expands ahead of 2026: Rajat Sharma

The Indian economy, a vibrant and dynamic entity, has consistently presented diverse investment opportunities. For competitive exam aspirants, understanding these shifts is crucial for grasping India's economic trajectory. Market expert Rajat Sharma's prediction of a significant shift in investor focus towards lagging sectors like Information Technology (IT), real estate, and platform businesses ahead of 2026 offers a compelling insight into future market dynamics.

**Background Context: A Shifting Economic Landscape**

For the past few years, India's economic narrative has been dominated by sectors like manufacturing, infrastructure, and certain consumer-driven industries, which have shown robust growth and attracted substantial investment. This period saw significant government push through initiatives like 'Make in India' and substantial capital expenditure on infrastructure projects. Concurrently, the IT sector, a traditional powerhouse for India, experienced a period of relative subdued performance. This was largely due to a global economic slowdown, inflationary pressures leading to higher interest rates in developed markets, and a post-pandemic normalization of demand for digital services after an initial surge. High valuations in the preceding years also made it less attractive for fresh investments, leading to a period of 'depressed valuations' as noted by Sharma. Similarly, the real estate sector has faced its own cyclical challenges, while platform businesses, despite their long-term potential, often require significant upfront investment and face intense competition.

**What's Happening: The Anticipated Comeback**

Rajat Sharma's outlook suggests a strategic shift in investor sentiment. As the market approaches 2026, there's an expectation that capital will rotate from currently dominant, high-valuation sectors to those that have underperformed but now present attractive entry points. The IT sector is particularly highlighted due to its depressed valuations, meaning companies are trading at prices lower than their intrinsic worth or historical averages. Additionally, 'currency tailwinds' are cited as a potential advantage for IT. A weakening Indian Rupee against the US Dollar generally benefits export-oriented sectors like IT, as their dollar earnings translate into more rupees, boosting profitability. Alongside IT, select fintech and platform companies with strong distribution networks are also poised for a comeback. Fintech's appeal stems from India's burgeoning digital payments ecosystem and the continuous drive towards financial inclusion, while platform businesses leverage India's vast consumer base and digital penetration.

**Key Stakeholders and Their Roles**

Several stakeholders are central to this anticipated market shift. **Investors**, both domestic and foreign, are the primary drivers, as their capital allocation decisions dictate market trends. Their shift in focus will directly impact the valuations and growth prospects of companies in these sectors. **IT companies** will be direct beneficiaries, potentially seeing increased investments, better valuations, and renewed hiring. This could spur innovation and expansion. **Fintech companies** and **platform businesses** stand to gain from enhanced investor confidence, allowing them to expand their reach and innovate further in areas like digital payments, lending, and e-commerce. The **Government of India** plays a crucial enabling role through its policies like Digital India, Startup India, and regulatory frameworks governing financial services (RBI) and capital markets (SEBI). Market experts and analysts, like Rajat Sharma, influence investor sentiment through their research and predictions, guiding investment strategies.

**Significance for India: A Path to Diversified Growth**

This predicted shift holds profound significance for India. Economically, it signals a potential **diversification of growth drivers**, moving beyond a few dominant sectors. This broadens the base of economic activity, making the economy more resilient to shocks in any single sector. IT and fintech are major **job creators**, especially for skilled youth, contributing significantly to employment generation. The renewed focus on these sectors will further boost India's **digital economy**, aligning with the 'Digital India' initiative launched in 2015, which aims to transform India into a digitally empowered society and knowledge economy. Fintech, in particular, contributes to **financial inclusion**, extending banking and financial services to underserved populations, a key objective enshrined in the Directive Principles of State Policy (DPSP), particularly **Article 38** (securing social order for welfare) and **Article 39** (minimizing inequalities). Enhanced investor interest can also attract more **Foreign Direct Investment (FDI)** and Foreign Portfolio Investment (FPI) into these crucial sectors, bolstering India's foreign exchange reserves and capital base.

**Historical Context and Future Implications**

India's economic history is replete with sectoral shifts. The IT boom of the late 1990s and early 2000s established India as a global IT services hub. Subsequent periods saw the rise of manufacturing, infrastructure, and now the digital economy. This current anticipated rotation is part of a natural market cycle where undervalued assets eventually attract capital. The **Information Technology Act, 2000**, provides the legal framework for e-commerce and cyber security, while the **Payments and Settlements Systems Act, 2007**, regulates digital payments, both foundational to the growth of IT and fintech. Looking ahead, this trend could lead to sustained growth in these sectors, foster a new wave of innovation and entrepreneurship, and strengthen India's position as a global digital and economic power. However, it also implies increased competition, the need for continuous skill development to meet industry demands, and robust regulatory oversight by bodies like the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) to ensure market stability and investor protection. The government's continued focus on ease of doing business and supportive policies under the **Startup India** initiative will be critical in harnessing this potential.

In essence, the predicted comeback of IT, fintech, and platform businesses signifies a maturing Indian market, capable of identifying value in diverse sectors, paving the way for a more balanced and digitally-driven economic future.