Introduction: Volatility as the New Normal in Tech
Fuelled by an abundant startup ecosystem and government programs like Make in India and Digital India, the Indian technology sector is a worldwide innovation powerhouse. But market volatility is becoming the rule rather than the exception due to rapid macroeconomic changes, unpredictable global markets, and rapid digital disruption.
Indian markets have surged to all-time highs in 2025, with the Nifty index surpassing 25,200 in June, despite global unpredictability. However, volatility indicators like market implied volatility (IV) and India VIX indicate that although markets are usually optimistic, there are still frequent short-term fluctuations associated with significant incidents. Tech professionals, investors, and entrepreneurs are challenged by this climate to create robust portfolios that can weather uncertainty and seize new opportunities.
1. Understanding Volatility in the Indian Tech Sector
Market Drivers
- Global Supply Chain Shifts: Indian tech production and exports are negatively impacted by disruptions carried on by trade policy changes, pandemic aftereffects, and geopolitical tensions that continue to disrupt the supply of technology hardware and components.
- Changing Investor Sentiment Toward Tech IPOs: After a surge in tech IPOs in 2021–2022, there were more significant value adjustments in 2024–2025, especially in SaaS and fintech companies. Investor nervousness as global tech spending fell was the cause of this.
- Policy Updates: For Indian tech companies, initiatives like Production Linked Incentive (PLI) schemes and changing data privacy legislation (such the Digital Personal Data Protection Act) are changing compliance requirements and operational costs.
Recent Trends
- The NASSCOM Strategic Review 2025 estimates that by FY26, Indian IT-BPM exports will surpass $300 billion, carried by global demand and digital transformation.
- While venture capital and private equity investments are still resilient, they are more dependent on valuation corrections, particularly in newer tech sectors like fintech and SaaS.
2. Strategic Asset Allocation for Tech Professionals
A balanced combination of traditional and alternative assets that are suited to the risk appetite and developmental goals of technologists is necessary to create an effective portfolio.
Equities
- Pay close attention to better innovation-driven Indian tech stocks that have solid foundations and opportunity to grow.
- To enable disciplined investment even during downturns, use Systematic Investment Plans (SIPs) to balance out market volatility.
Fixed Income
- Allocate to short-term debt funds for liquidity and safety.
- Invest in long-duration bonds to hedge against interest rate cycles and inflation.
Alternatives
To take advantage of early-stage growth and reduce reliance on typical IT outsourcing firms, diversify with private equity, tech-focused mutual funds, and a few international exchange-traded funds.
Tip: Allocate at least 10–15% of your portfolio to alternatives for better diversification and risk mitigation.
3. Tech Sector Equity Investing: Quality Over Hype
What to Look For
- Strong R&D Investment: Companies that consistently invest in innovation tend to outperform during volatile periods.
- Scalable Business Models: Resilient companies have recurring revenue streams and scalable digital platforms.
- Stable leadership and steady cash flows: These elements offer stability when the market declines.
Case Study
Because of their diverse audience and strong digital transformation pipelines, Infosys and TCS recovered more quickly following the 2020 correction. They are now leaders in the rapidly changing tech sector thanks to their investments in AI, cloud computing, and cybersecurity.
Action Point: As AI, cloud, and cybersecurity adoption are key growth drivers in 2025 and beyond, give priority to businesses that are at the forefront of these fields.
4. Managing Risk: Practical Steps for Indian Tech Investors
Maintain Liquidity
Keep 10–20% of your portfolio in liquid assets to capitalize on market dips and avoid forced selling during downturns.
Leverage Technology
For automated rebalancing, risk management, and real-time portfolio tracking, use fintech platforms and robo-advisors.
Monitor Key Indicators
To predict market movements and modify strategies appropriately, stay aware of sector-specific news, global tech trends, and RBI policy changes.
Consult Experts
Consult SEBI-registered financial advisors for individualized investment plans that fit your objectives and risk tolerance.
5. Embracing Opportunity Amid Uncertainty
Volatility is not only a risk but also a source of opportunity for informed investors.
Historical Data
Strong rallies have frequently been preceded by corrections in the tech sector; for instance, the sector experienced multi-year growth spurts following the 2013 tech downturn and the 2020 pandemic shock.
Growth Outlook
- Over 150,000 new IT jobs are projected for FY26, reflecting sector expansion.
- Leading companies have adoption rates of AI and automation above 90%, which boosts output and introduces new services.
Key Tech Sector Metrics (FY25–FY26)
|
Projection
|
IT-BPM Exports
|
$300+ billion
|
Indian IT Industry Valuation
|
$350 billion
|
AI & Automation Adoption
|
90%+ of leading firms
|
New IT Jobs
|
150,000+
|
Contribution to GDP
|
10%
|
6. Real-World Example: Startup Resilience in Volatile Markets
During the 2022 market downturn, a Bengaluru-based SaaS startup expanded into adjacent verticals and reduced cloud costs to diversify its revenue streams. Its 30% year-over-year growth in spite of sector-wide funding slowdowns shows that cost control and strategic agility can propel success in the face of volatility.
7. Recommendations for the NASSCOM Community
For Entrepreneurs
- Build cash reserves and diversify funding sources to weather funding cycles.
- Invest in digital upskilling for teams to stay competitive in emerging technologies.
For Investors
- Focus on tech companies with strong fundamentals and clear innovation roadmaps.
- Utilize data-driven tools and analytics for portfolio construction and risk management.
For Policy Makers
- Continue supporting digital infrastructure development and startup incentives to sustain sector growth.
Conclusion: Resilience Through Knowledge and Adaptability
In today's interconnected global economy, market volatility is unavoidable, particularly for the vibrant Indian technology sector. However, professionals and investors can not only survive but also prosper with a tech-savvy, diversified, and disciplined approach.
The secret is to stay up to date on macroeconomic and sector trends, keep your portfolio diversified across asset classes, and use technology-enabled risk management tools. By doing this, Indian tech investors and entrepreneurs can take advantage of the enormous growth potential that lies ahead and navigate uncertainty with confidence.
Stay informed, stay diversified, and let data guide your investment decisions.
References
- Decoding Volatility: What VIX and IV are telling us in 2025, Economic Times, https://economictimes.com/markets/stocks/news/decoding-volatility-what-vix-and-iv-are-telling-us-in-2025/articleshow/121988562.cms
- India's IT Industry 2025: Growth, Challenges & Investment Outlook, Grip Invest, https://www.gripinvest.in/blog/the-information-technology-industry-in-india
- 13 best tech stocks for Indian investors to buy in 2025, Winvesta, https://www.winvesta.in/blog/13-best-tech-stocks-for-indian-investors-to-buy-in-2025
- 2025 technology industry outlook, Deloitte Insights, https://www.deloitte.com/us/en/insights/industry/technology/technology-media-telecom-outlooks/technology-industry-outlook.html
- Equities rally 9.1% in first half of 2025 amid volatility, reach all-time high, Investing.com, https://in.investing.com/news/stock-market-news/equities-rally-91-in-first-half-of-2025-amid-volatility-reach-alltime-high-93CH-4896725
- Volatility ahead, but long-term investors can sleep through it: Nilesh Shah, Economic Times, https://economictimes.com/markets/expert-view/volatility-ahead-but-long-term-investors-can-sleep-through-it-nilesh-shah/articleshow/122156418.cms
- Indian Broking Technology industry in 2025, LinkedIn, https://www.linkedin.com/pulse/indian-broking-technology-industry-2025-ganesh-durgapal-idvpc