Nifty IT snaps six-day losing streak, up 4%; Coforge, Persistent lead gains

Nifty IT index: Today's rebound in IT stocks followed a sharp decline over the past six sessions, during which the index had lost 4.6 per cent

Nifty IT index: The Nifty IT index ended its six-session losing streak today, surging 4 per cent after brokerage firm CLSA, in a report, said that it sees no increase in AI-led deflation. The index zoomed more than 4 per cent to reclaim the 30,000 mark briefly, hitting a high of 30,055.

As of 1:40 PM, the IT index was up 3.7 per cent to trade at 29,840, emerging as the biggest sectoral gainer.

 

All 10 constituents of the Nifty IT index traded firmly in the green, led by Persistent Systems, Mphasis, and Oracle Financial Services Software, gaining more than 4 per cent each. Infosys, TCS, HCL Tech, Tech Mahindra, and LTM rose between 3 and 4 per cent, reflecting broad-based buying interest.

 

Today's rebound in IT stocks followed a sharp decline over the past six sessions, during which the index had lost 4.6 per cent. The index is down more than 25 per cent in 2026 so far. The buying also coincides with the recovery in the broader markets.  

 

IT sector outlook  CLSA has indicated that fears of AI-led pricing pressure in India’s IT industry may be overstated. The brokerage said that it finds "no evidence" of increased deflation in renewal contracts for bellwethers TCS, Infosys, HCL Tech, and Wipro due to the latest AI tools from Anthropic and OpenAI since their launch.

 

According to CLSA, vertical-wise demand commentary remains intact with BFSI continuing to see tailwinds for all four companies. Tech is doing well for HCL and TCS and the retail, auto and healthcare verticals remain soft. 

The report also noted that ongoing Middle East tensions will have limited direct impact on Indian IT companies. The four companies (TCS, Infosys, HCL and Wipro) have revenue exposure in low single digits but the broader macro impact will depend on the duration of the crisis and impact on inflation, interest rates, GDP growth and broader IT services spending.  The deal pipelines, it said, remain strong and valuations for India’s IT sector at its 10-year average now look highly attractive.  CLSA said that its high-conviction picks are Persistent Systems (target ₹8,058) and Coforge (target ₹2,278). It has maintained 'Outperform' ratings on Infosys (target ₹1,653), Tech Mahindra (target ₹1,698), TCS (target ₹3,333) and LTM (target ₹6,304) and Hold ratings on HCL Tech (₹1,506) and Wipro (₹218).

   

'Bounce largely valuation-driven'  Dhanashree Jadhav, technology analyst at Choice Institutional Equities, said that a buying interest is emerging with investors stepping in IT counters at lower levels. She said that the bounce is largely valuation-driven.

"Overall, the recovery was expected, as valuations provided strong comfort for investors, making further downside limited," she said.

The developments surrounding AI, she said, has created some negative sentiment in the IT sector. However, it is important to note that Indian IT services players primarily focus on system integration and modernisation work for enterprises. For the adoption of AI products, companies still need these IT services players.

"Fundamentally, there is no immediate threat that will significantly impact IT services players in the near term," the analyst said, adding that midcap stocks such as Coforge, Persistent Systems, and Happiest Minds are currently trading at attractive levels.

"This recovery appears sustainable, especially given stable post-quarter results, with no negative surprises expected in terms of growth or margins. Q4 results are expected to be in line with previous quarters, with potential margin expansion," the analyst added.  ICICI Sec upgrades Coforge, Mphasis to 'Buy'  In a recent note, ICICI Securities said that the IT services sector is entering a value zone after a sharp phase of correction. The brokerage said that it sees limited downside risks to near-term earnings (FY27/FY28) and upgraded its sector outlook to 'Neutral'.

 

“With the now priced-in structural AI headwinds, we upgrade our sector stance to Neutral,” ICICI Securities said. It noted that the launch of advanced AI agents is unlikely to upend IT delivery models overnight, but the advancement in AI agents increases the risk of AI-led revenue deflation.

 

The report added that Nifty IT is now trading at 15.4x (two-year forward earnings), at par with Nifty 50 vs its long-term average premium of 17 per cent.  

 

The brokerage said that it prefers midcaps over largecaps because smaller companies are better placed to quickly remodel their business and compete with incumbents in large multi-service line deals leveraging AI. Among midcaps, it has upgraded Coforge to 'Buy' from 'Hold'; Mphasis to 'BUY' from 'Add' and  LTM to 'Hold' from 'Reduce'.    ================================== 

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