IT Stocks Swing From Losses To Gains As Sector Snaps Losing Streak
Indian IT stocks witnessed sharp intraday swings before staging a recovery that helped the Nifty IT index snap a three-session losing streak and close in positive territory at 32,799.90. The rebound came after the index had fallen more than 1 percent in morning trade, reflecting how quickly sentiment can shift in a sector currently caught between fear and opportunity.
Heavyweight stocks such as Infosys and Tech Mahindra initially dragged the index lower, but buying interest emerged later in the session. Mid-cap names like Coforge and Persistent Systems rose as much as 3 percent, helping the index recover lost ground. The move suggested that selective investors are beginning to differentiate between panic-driven selling and long-term fundamentals.
Despite the recovery, the broader tone in IT remains cautious, as global macro signals, AI disruption narratives, and currency moves continue to influence investor positioning.
Here’s What Happened Today And Why Traders Reacted
Today’s session in IT stocks was defined by high volatility and fast-changing sentiment. Traders initially reacted to global cues and AI-related concerns, which pushed the index lower in early trade. However, bargain buying and short covering later helped the sector recover.
Key drivers behind trader reaction included:
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Continued AI disruption concerns
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Global tech sector weakness spillover
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Rupee depreciation impact on IT margins
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FPI flow volatility
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Selective mid-cap buying interest
For short-term traders, the recovery presented intraday trading opportunities, while long-term investors used the dip to accumulate selectively.
Also Read : Aye Finance Makes a Quiet Market Entry at Issue Price—Are Investors Taking a Wait-and-Watch Approach?
AI Disruption Fears Continue To Shape Sector Narrative
The recent correction in IT stocks began earlier this month when investors started reassessing how artificial intelligence could reshape traditional IT services. The launch of a legal AI tool by Anthropic intensified worries that AI could automate parts of coding and software development, potentially affecting revenue models.
Vaqarjaved Khan of Angel One noted that sentiment weakness was amplified by global tech softness and rupee depreciation, which together contributed to foreign portfolio investor outflows. Currency fluctuations often play a significant role in IT valuations because of the sector’s export exposure.
However, some analysts argue that AI is more likely to change service delivery rather than eliminate demand altogether.
Global Macro Signals Add To Investor Uncertainty
US macro data has also influenced sentiment. January job growth surprised on the upside, and unemployment fell to 4.3 percent, suggesting economic resilience. This may give the US Federal Reserve room to hold rates higher for longer.
Yet economists cited by Reuters pointed out that job growth remained concentrated in healthcare and social services, not broad-based expansion. Christopher Rupkey of FWDBONDS remarked,
“The only jobs being filled…do not guarantee the economy’s future success.”
Such mixed signals keep global investors cautious toward rate-sensitive and tech-driven sectors, including Indian IT.
JPMorgan Urges Caution As Valuations Look Stretched
JPMorgan’s Rajiv Batra has taken a guarded stance, warning that valuations remain high relative to earnings visibility. He said investors should favour companies that adapt to AI efficiently and at lower cost than global peers.
He also flagged potential downside risks, stating he sees “substantial downside” from current levels. JPMorgan’s research note, “Looking through the AI fog,” added nuance by noting that AI could create new work areas rather than simply shrink vendor opportunities.
The brokerage wrote,
“IT firms remain the plumbers of the technology world… it’s overly simplistic to assume AI can replace the value IT services firms create.”
Still, JPMorgan believes near-term valuation comfort is limited.
Macquarie Sees Opportunity As Fears Look Overdone
Macquarie’s Ravi Menon offered a more optimistic interpretation. He argued that technology demand is elastic and historically adapts to falling coding costs.
He said,
“Back in 2012–13, when low-code tools emerged, similar fears existed. Those practices later became growth drivers.”
According to Menon, current AI tools are evolutionary rather than revolutionary. He described the selloff as fear-driven and suggested this may be a phase where investors accumulate selectively.
He added that demand trends are improving and that April guidance could trigger PE rerating. However, he cautioned that some large-caps could still see up to 10 percent downside in a worst-case scenario.
What Impacted The Market Today
Today’s market movement in IT was shaped by:
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AI competition fears
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Divergent brokerage views
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Global tech cues
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Currency trends
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Selective mid-cap buying
The recovery indicates that investors are not uniformly bearish but are instead recalibrating expectations.
What This Means For Investor Portfolios
For investors, the current phase demands selectivity.
Portfolio impact considerations:
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Short-term volatility likely to persist
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Large-caps may see valuation pressure
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Mid-caps showing selective strength
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AI adaptation strategies matter
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Earnings guidance remains key trigger
Investors with higher risk appetite may see opportunities during corrections, while conservative investors may prefer waiting for clearer earnings visibility.
What To Watch In Coming Days
Key triggers ahead include:
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April earnings guidance
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US rate trajectory
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Rupee movement
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AI adoption strategies by IT firms
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FPI flow direction
The IT sector stands at an inflection point where narrative and numbers must align. Whether today’s rebound marks a trend reversal or a temporary pause will depend on how companies demonstrate resilience in an AI-driven world.
