The IT sector plays a crucial role in global economic growth, driving innovation through software, services, and technological solutions. It includes major industries like software development, IT services, and consulting. As digital transformation accelerates, the sector continues to experience strong demand across various industries.
In a market where IT stocks have struggled under prolonged bearish sentiment, Indian IT stocks have made a remarkable recovery, adding an impressive Rs. 2.32 lakh crore in market value over just nine trading sessions. Since April 9, the Nifty IT index has risen by over 9 percent, significantly outpacing the broader market, suggesting a potential turnaround for the sector.
Despite most IT stocks still facing challenges in a tough market, a sudden surge has occurred. This boost comes as global trade tensions ease and the US market recovers. Investors are turning to IT stocks as a safer bet, especially with rising geopolitical tensions between India and Pakistan following the Kashmir attack in Pahalgam.
Nifty IT Index
In Monday’s trading session, the Nifty IT Index declined by 0.17 percent from the previous close of Rs. 35,562.25 and is currently trading at Rs. 35,379. Over the last few sessions, the index has recovered nearly 16 percent.
Here are the views of the analyst on the IT sector: Are we witnessing a powerful revival or a temporary blip?
Sushovon Nayak, IT Research Analyst at Anand Rathi Institutional Equities
He stated that we should be careful about calling the IT stock rally a full recovery. While the performance has been good, it seems more driven by market sentiment and technical factors, rather than strong fundamentals. He also pointed out that recent results from major IT companies were mixed, with some giving cautious outlooks for the future.
Nayak said that while there may be some opportunities in specific stocks during this market correction, he remains overall positive about the IT sector. He mentioned that while Q4FY25 and Q1FY26 results might be weak, demand for AI and the need to modernize data and infrastructure will boost IT spending from the second half of FY26, with stronger growth expected in FY27.
He pointed out that while large-cap IT stocks have weak Q4 numbers, their valuations are close to 10-year averages, and they offer good free cash flow (FCF) and dividend yields. He also mentioned that TCS and Infosys are still strong in terms of valuations, but growth concerns remain. Wipro is expecting a slight decline in growth for Q1, while Tech Mahindra is focusing on rebuilding its banking and telecom business.
He highlighted that LTIMindtree stands out among large-cap IT companies, as it is expected to grow in FY26, with stable performance in retail and manufacturing sectors, especially under its new CEO.
Saji John, Senior Research Analyst at Geojit Investments
He expressed a similar opinion, saying that the March quarter results showed a cautious outlook. Most large IT companies had mixed results. He pointed out that the near-term performance might stay weak due to uncertainty around US tariffs and geopolitical issues, which could affect spending in key markets. Inflation is also causing delays in decisions in industries like retail, manufacturing, and insurance.
John warned that while inflation is slowing decision-making in many industries, the “deal pipeline remains strong,” which could support growth into FY26. He also mentioned that if inflation stabilizes, the US Federal Reserve might lower interest rates, leading to more business opportunities.
The Rs. 2.32 lakh crore rally has revived the struggling IT sector, but analysts agree that the sector’s fundamentals need to improve for the growth to continue. As global markets stabilize and demand becomes clearer, investors will be watching to see if this rebound is the start of a long-term recovery or just a temporary break in a tough environment.
Written by Sridhar J
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