IT stocks gained momentum on Wednesday, offering relief to a sector that has been under pressure in recent months amid global growth worries and technology spending concerns. The Nifty IT index jumped 4 per cent in early trade to 29,926.85 from its previous close of 28,760.90, driven by strong buying across frontline and mid-tier companies.
Heavyweight counters such as , , and advanced 3–4 per cent. Mid-cap names saw sharper gains, with , , and rising 4–5 per cent.
CLSA sees stable demand
Global brokerage CLSA said its recent discussions with management teams of TCS, Infosys, HCL Technologies and Wipro suggest there is no evidence of increased pricing deflation in renewal contracts following the launch of advanced AI tools by Anthropic and OpenAI.
The brokerage noted that demand trends remain resilient across key verticals. The BFSI segment continues to witness strong tailwinds for major IT firms, while the technology vertical remains healthy for HCL Technologies and TCS. However, retail, automobile and healthcare segments remain relatively soft.
CLSA added that a few companies flagged minor delays in client decision-making as enterprises assess the full potential of new AI tools and navigate uncertainties arising from the West Asia crisis. Direct revenue exposure to the region remains limited to low single digits for most firms, though broader macroeconomic effects will depend on the duration of the conflict and its impact on inflation, interest rates and global growth.
Despite near-term uncertainties, deal pipelines remain strong and valuations for Indian IT companies, now hovering around their 10-year averages, appear highly attractive, CLSA said, while maintaining positive views on select stocks in the sector.
Reflecting its preferences, CLSA maintained a high-conviction overweight stance on Persistent Systems and Coforge; overweight on Infosys, Tech Mahindra, TCS and LTIMindtree; and Hold rating on HCL Technologies and Wipro.
Kotak flags AI-linked deal scrutiny
A recent note by Kotak Institutional Equities said emerging developments around agentic AI are beginning to influence client behaviour, leading to longer decision cycles and greater scrutiny of productivity benefits in IT services contracts. While deal flow continues without any major demand shock, clients are increasingly seeking clarity on automation gains and outcome-based delivery models. The brokerage noted that near-term pressure is more visible in existing contracts where customers are factoring in anticipated efficiency gains during renewals, even as new deal pipelines remain intact.