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Nifty IT jumps 2.6 percent to 30441.45 after sharp selloff, Kotak says pessimism is priced in, valuations attractive but AI and macro risks keep growth outlook modest
Nifty IT stocks rebound even as broader markets remain volatile amid global uncertainty.
The Nifty IT index staged a strong recovery, rising 2.60% to close at 30,441.45, as buying interest returned to the sector after a recent sharp selloff triggered by concerns around AI-led disruption.
The IT pack had come under pressure in recent months amid fears that rapid advancements in artificial intelligence could disrupt traditional IT services and compress margins. Concerns around slower global tech spending and cautious client outlooks had further weighed on sentiment.
The latest move suggests that some of these fears may have been priced in, with investors selectively returning to IT stocks at lower valuations.
The rally in IT stocks comes at a time when broader markets have been under pressure and largely trading with volatility.
The BSE Sensex has declined around 2.5% over the past five sessions, currently hovering near 73,319 levels, indicating continued weakness and consolidation near its recent lows.
Similarly, the Nifty 50 has slipped about 1.5% over the past week, trading around 22,713. The benchmark index has largely moved in a narrow range, suggesting a sideways to slightly negative trend amid global uncertainties.
According to a Kotak Institutional Equities report, much of this pessimism may already be priced in, with stocks correcting 19–39% in the past two months.
The report notes that despite near-term weakness, the sector is now seeing a stable to improving year-on-year growth trajectory, supported partly by currency tailwinds.
Kotak highlights that FY2027 guidance is likely to remain modest, with companies such as Infosys and HCLTech expected to guide for 3–5% revenue growth, reflecting a cautious demand environment.
Two key risks dominate the outlook:
Ongoing geopolitical tensions (including Iran-related uncertainty)
GenAI-led productivity gains, which may reduce pricing power
This suggests that while growth may not be strong, it is stable rather than deteriorating.
Valuations Turn Attractive, But Not Without Risks
The report clearly states that IT stocks are now “cheap but with many uncertain parts.”
Large-cap stocks like TCS and Tech Mahindra are trading at relatively lower valuations, reflecting subdued growth expectations. At the same time, mid-cap names like Coforge are seen at reasonable multiples.
However, investors should note that macro headwinds and AI disruption risks still remain key overhangs.
Stock Picks: What Analysts Prefer
Kotak’s preferred picks in the sector include:
TCS
Infosys
HCLTech
Tech Mahindra
Coforge
These companies are expected to benefit from stable deal pipelines, margin support from currency, and relatively better positioning in the evolving AI landscape.
The report suggests that current levels may offer selective opportunities, especially after the sharp correction. However, this is not a high-growth phase for IT. Instead, it is a phase of gradual recovery with uncertainty.
While broader markets remain volatile and directionless, IT stocks are showing early signs of recovery. As per the Kotak report, valuations are becoming attractive, but growth visibility remains moderate.
April 04, 2026, 1:19 PM IST
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