27 February 2026 (Navroze Bureau) : As global markets grapple with volatility fueled by artificial intelligence (AI) disruption, geopolitical tensions, and shifting monetary cycles, veteran investor Madhusudan Kela has outlined a pragmatic strategy for navigating what he describes as a “structurally transforming” market environment.
Kela believes that while short-term swings may test investor patience, the long-term opportunity set remains compelling—particularly for those willing to differentiate between hype-driven momentum and fundamentally strong businesses.
According to him, AI is not just a theme but a broad-based productivity revolution that will impact sectors ranging from manufacturing and financial services to healthcare and consumer technology. However, he cautions that investors should avoid chasing stocks solely because they are labeled “AI plays.”
“Disruption creates wealth, but it also destroys wealth,” Kela has said in recent market discussions. The key, he argues, lies in identifying companies that are beneficiaries of structural shifts rather than speculative enthusiasm.
Focus on Earnings Visibility
In a choppy market, Kela suggests prioritizing companies with strong earnings visibility, healthy balance sheets, and consistent cash flows. Businesses that demonstrate pricing power and operational resilience tend to outperform during volatile cycles.
He advises investors to look beyond near-term corrections and focus on long-term compounding stories. “Market corrections are opportunities, not threats,” he has emphasized, particularly in sectors aligned with India’s economic growth story.
Manufacturing and Capex Cycle
Kela remains optimistic about India’s capital expenditure cycle and manufacturing push. He believes policy initiatives, infrastructure development, and global supply chain realignments present multi-year opportunities in industrials, engineering, and capital goods companies.
He also notes that global companies diversifying production bases could benefit Indian manufacturers, especially those with export capabilities and technological integration.
Selective Approach to Technology
While acknowledging AI’s transformative potential, Kela warns against overvaluation risks in technology stocks. He suggests investors distinguish between companies building core AI infrastructure, those effectively integrating AI to improve margins, and those merely capitalizing on market sentiment.
He advocates investing in firms that use AI to enhance productivity and efficiency rather than those dependent solely on speculative projections.
Banking and Financial Services
Kela has often highlighted the resilience of India’s financial sector. He suggests that well-capitalized banks and non-banking financial companies (NBFCs) with prudent lending practices and strong asset quality could continue to perform despite macroeconomic uncertainty.
He believes that credit growth, retail participation, and digital transformation within banking provide structural support to the sector.
Avoid Over-Leverage and Overtrading
In volatile markets, Kela advises retail investors to avoid excessive leverage and speculative trading. Instead, he promotes disciplined asset allocation and systematic investment approaches.
He recommends staggered buying during corrections rather than deploying capital in one go. This strategy reduces risk and helps average entry prices over time.
Long-Term Structural Themes
Beyond AI and manufacturing, Kela sees long-term potential in sectors such as renewable energy, domestic consumption, infrastructure, and specialty chemicals. He emphasizes that India’s demographic advantage and policy reforms could drive sustained economic expansion.
However, he reiterates that stock selection is critical. “Sector themes can help, but wealth is created by owning quality businesses,” he has stated in multiple forums.
Patience as a Strategy
One of Kela’s core principles is patience. In uncertain markets, he believes investors often undermine returns by reacting emotionally to volatility. Instead, he encourages a disciplined, research-driven approach.
He notes that wealth creation in equities is rarely linear. “There will be corrections, consolidations, and periods of underperformance,” he says, adding that staying invested in high-quality companies through cycles can yield superior long-term results.
Balancing Growth and Value
Kela also supports balancing growth-oriented investments with value opportunities. In AI-led rallies, growth stocks may command premiums, but value stocks can offer margin-of-safety advantages during corrections.
Diversification across sectors and market capitalizations, he suggests, remains essential in a fragmented market environment.
Summary
Madhusudan Kela advises focusing on fundamentally strong companies, avoiding AI hype, investing during corrections, and maintaining patience and discipline to navigate volatile, AI-driven markets effectively.