Madhusudan Kela Advises Cautious Investing in Smaller Firms Amid AI-Driven Market Volatility
Prominent investor and Founder and Managing Director of MK Ventures, Madhusudan Kela, said investors must remain vigilant and selective as rapid advancements in artificial intelligence (AI) continue to disrupt markets and reshape investment opportunities.
Speaking at the News18 Rising Bharat Summit, Kela highlighted the unprecedented pace of technological change, noting that AI is transforming industries faster than previous technological revolutions. He emphasised that while technology has historically created wealth overall, it has also led to significant divergence between winners and losers.
AI Expected to Create Winners and Losers
Kela drew parallels with past technology cycles, citing how companies that adapted to innovation thrived while others declined. He noted that a similar pattern is likely to emerge in the AI era, including within the information technology sector, where adaptability will be critical for survival and growth.
He added that AI’s rapid evolution is accelerating disruption across industries, presenting both long-term opportunities and short-term risks, particularly in employment, as workforce reskilling may struggle to keep pace with technological change.
India Positioned for Long-Term AI Opportunities
Despite short-term uncertainty, Kela expressed optimism about India’s long-term prospects, citing the country’s strong skilled workforce and potential to become a global provider of AI-driven solutions and applications.
He noted that market returns have remained subdued over the past 18 months, with the small-cap segment facing significant corrections. According to him, several companies have seen sharp declines, creating potential opportunities for disciplined investors.
Selective Opportunities Emerging in Small-Cap Stocks
Kela said the current market environment could present attractive opportunities in smaller companies, but cautioned against indiscriminate investing. He explained that institutional investors, including large mutual funds, tend to focus on large-cap stocks, often leaving smaller firms undervalued during periods of reduced investor interest.
He emphasised that historically, periods of market weakness and reduced participation have often provided the best opportunities for long-term wealth creation, particularly for investors willing to carefully identify fundamentally strong companies.
Kela advised investors to adopt a selective and long-term approach, focusing on quality businesses that can adapt to technological disruption and benefit from the ongoing AI transformation.