Nikhil Kamath reveals his 3 top investment theme as Middle East tensions shake markets, ‘Looks cheap today, but…’

Nikhil Kamath, co‑founder of Zerodha Broking Ltd., singled out energy transition, electric vehicles and beaten‑down Indian IT stocks as his top investment themes as Middle East tensions roil markets. Speaking on Bloomberg Television, Kamath said the geopolitical shock has reinforced the strategic importance of the energy transition and opened opportunities across the EV‑battery‑grid value chain, while recent foreign outflows and commodity moves have made select Indian stocks more attractive.

"Energy transition has become a key investment theme, cuurently. Electric vehicle and battery makers, transmission companies and grids have become potent ideas to follow," Kamath told Bloomberg Television.

What Kamath is watching

Kamath framed his view against a broader market backdrop in which Indian equities — part of a roughly $5 trillion equity market — have underperformed many Asian peers this year amid the Middle East conflict, heavy foreign investor selling, elevated commodity prices and slower earnings growth. Foreign investors have pulled out a record $29 billion from Indian stocks so far this year, though there have been signs of renewed buying after measures to support the rupee.

• Energy transition: Kamath identified electric vehicle makers, battery manufacturers, transmission companies and grid operators as "potent ideas to follow" as the world seeks alternatives and resilience in energy supply chains.
• Information technology: He called the IT sector a contrarian opportunity, saying, "Some really well‑run IT services companies in India are cheap today and they look attractive."
• Valuation play amid flows: Kamath argued that falling global oil prices and a weaker rupee could support equities, particularly as many names have lagged for an extended period.

Context and market dynamics

Kamath noted that Indian benchmark indices have seen mixed action recently: the markets rallied in four of five trading sessions last week and registered gains in the previous session, but then faced heavy selling on Tuesday as Sensex and Nifty dropped over 1% tracking global weakness and declines in large stocks such as HDFC Bank and several IT firms. Fresh foreign fund outflows contributed to the weakness.

On investor behaviour, Kamath was frank about foreign participation in India: "Foreign funds don’t have track record of timing Indian markets well," he said, noting a pattern of exiting when valuations are cheap and returning when stocks are expensive. "I hope, in a way, history repeats itself." His comment underscores a view that current dislocations could present long‑term buying opportunities.

Outlook

Kamath expressed cautious optimism that Indian markets may revive as external pressures ease and some sectoral shifts accelerate. He pointed to lower global oil prices and a weaker rupee as potential near‑term supports that could help markets recover. For investors, his message is thematic: position for the energy transition across EVs, batteries and grid infrastructure while treating select, well‑run IT services companies as attractive contrarian bets amid broader market volatility.