99
Indian IT stocks rallied on Wednesday, with Wipro, Infosys and Birlasoft rising more than 3% as investors responded to improving sentiment across the technology sector. Brokerage firm Jefferies has also identified opportunities for a potential valuation recovery in select large-cap
and mid-cap IT companies.
According to NDTV Profit, Wipro shares climbed 3.51%, while Birlasoft advanced 3.18% and Infosys gained 3.14%. Newgen Software and Tata Consultancy Services (TCS) also rose 2.28% each, reflecting broad-based buying across IT stocks.
The rally comes as investors reassess the outlook for Indian IT services companies following a period of weakness in sector valuations. Jefferies believes that recent share-price corrections and changing growth expectations could create opportunities for selected companies to regain investor confidence.
Jefferies has raised its target prices for large-cap IT stocks by 14–18%, according to the report. However, the brokerage remains selective in its assessment of the sector.
It sees potential for a valuation re-rating in Infosys and TCS, although it has retained a Hold rating on Infosys and an Underperform rating on TCS. This indicates that the possibility of higher valuations does not necessarily translate into an outright bullish recommendation on every stock.
A re-rating occurs when investors become willing to pay a higher valuation for a company’s expected earnings or future growth. For IT companies, such a recovery would depend on improving business confidence, sustained earnings and stronger expectations for long-term demand.
Jefferies has highlighted Coforge and Sagility among mid-cap companies with potential for a valuation recovery. Their prospects will depend on individual growth opportunities, earnings performance and current valuations.
The brokerage's assessment suggests that investors may increasingly distinguish between companies rather than expecting a uniform recovery across the entire IT sector.
Despite the positive sentiment, uncertainty surrounding global artificial intelligence spending remains a major concern for the sector. A weaker outlook for AI-related capital expenditure could put pressure on IT valuations, particularly if clients reduce technology budgets or delay projects.
Jefferies has also warned that companies could face valuation pressure if their earnings fail to meet expectations for the 2026–27 and 2027–28 financial years.
For India's IT industry, the next phase of the rally will depend on whether companies can sustain earnings growth and demonstrate that demand for technology services remains resilient amid rapid AI-driven changes.
According to NDTV Profit, Wipro shares climbed 3.51%, while Birlasoft advanced 3.18% and Infosys gained 3.14%. Newgen Software and Tata Consultancy Services (TCS) also rose 2.28% each, reflecting broad-based buying across IT stocks.
The rally comes as investors reassess the outlook for Indian IT services companies following a period of weakness in sector valuations. Jefferies believes that recent share-price corrections and changing growth expectations could create opportunities for selected companies to regain investor confidence.
Jefferies has raised its target prices for large-cap IT stocks by 14–18%, according to the report. However, the brokerage remains selective in its assessment of the sector.
It sees potential for a valuation re-rating in Infosys and TCS, although it has retained a Hold rating on Infosys and an Underperform rating on TCS. This indicates that the possibility of higher valuations does not necessarily translate into an outright bullish recommendation on every stock.
A re-rating occurs when investors become willing to pay a higher valuation for a company’s expected earnings or future growth. For IT companies, such a recovery would depend on improving business confidence, sustained earnings and stronger expectations for long-term demand.
Jefferies has highlighted Coforge and Sagility among mid-cap companies with potential for a valuation recovery. Their prospects will depend on individual growth opportunities, earnings performance and current valuations.
The brokerage's assessment suggests that investors may increasingly distinguish between companies rather than expecting a uniform recovery across the entire IT sector.
Despite the positive sentiment, uncertainty surrounding global artificial intelligence spending remains a major concern for the sector. A weaker outlook for AI-related capital expenditure could put pressure on IT valuations, particularly if clients reduce technology budgets or delay projects.
Jefferies has also warned that companies could face valuation pressure if their earnings fail to meet expectations for the 2026–27 and 2027–28 financial years.
For India's IT industry, the next phase of the rally will depend on whether companies can sustain earnings growth and demonstrate that demand for technology services remains resilient amid rapid AI-driven changes.
