IT stocks today: IT stocks extended gains on Friday, July 3, tracking broader gains in global technology shares after the sector received a much-needed reprieve from the heavy selling witnessed in recent weeks. Sentiment improved after a significant miss in US jobs creation eased concerns over a potential interest rate hike by the US Federal Reserve.
Positive momentum in Indian stock markets, along with strength across global markets, further lifted investor sentiment. The IT pack emerged as the biggest gainer in today’s session.
The Nifty IT index surged around 3% in intraday trade to hit the day’s high of 27,718.45, extending gains after a 4.64% rally in the previous session. The rebound comes after the index had declined for four consecutive sessions, falling 6.5%.
Despite the recent recovery, the sector has significantly underperformed the broader market this year. Nifty IT was the worst-performing sectoral index in the first half of calendar year 2026 (H1CY26), plunging 30%, compared with a 9% decline in the Nifty 50. The sharp fall was driven by global macroeconomic concerns, weak discretionary spending by clients, an earnings growth-valuation mismatch, and disruption arising from artificial intelligence (AI).
The longer-term performance also reflects the pressure on the sector. Over the past one year, the Nifty IT index has declined 29%. It has fallen 28% over the last six months and is down 10% over the past three months.
Nifty IT constituents
All Nifty IT constituents traded in positive territory on Friday.
HCL Tech led the gains, rising 4.5%. Persistent Systems, Mphasis, Wipro, Tech Mahindra, and Coforge advanced between 2% and 3% each. Meanwhile, TCS, L&T Technology Services, LTIM and Infosys also gained more than 1% each.
Is the worst over for the IT sector?
The sharp correction in IT stocks over the past several months has brought valuations closer to long-term averages, prompting investors to reassess whether the sector now offers an attractive entry point. While analysts acknowledge that near-term challenges remain, they believe the steep decline has improved the sector’s risk-reward profile. However, they also caution that a sustained recovery will depend on signs of improving demand, stabilising revenue growth and the ability of companies to monetise AI-led opportunities.
Apurva Sheth, Head of Market Perspectives & Research at SAMCO Securities, said the recent correction has pushed the Nifty IT index nearly 10% lower since the brokerage’s earlier note on the sector. While concerns over AI disruption, slowing discretionary spending and global macroeconomic uncertainty continue to dominate, he noted that history suggests periods of extreme pessimism often create attractive investment opportunities.
He said valuations have corrected below their long-term averages, making the risk-reward equation considerably more favourable than it was a few months ago.
“Be greedy when others are fearful.”
Sheth also highlighted that the second half of the calendar year has historically been the strongest period for the Nifty IT index over the past 30 years. According to him, average quarterly returns have stood at 3.4% in the first quarter and 0.6% in the second quarter, but have improved to 10.2% in the third quarter and 11.3% in the fourth quarter.
He added that seasonality alone should not drive investment decisions. However, the combination of attractive valuations, extreme pessimism and favourable historical seasonality tilts the odds in favour of investors. He believes that if earnings expectations stabilise and global technology spending gradually recovers, the second half of the year could once again prove rewarding for patient IT investors.
Meanwhile, Brokerage firm Motilal Oswal Financial Services also believes valuations have corrected meaningfully. However, it said a sustained rerating would require evidence that demand is improving, revenue growth is stabilising and companies are demonstrating that AI-led opportunities are beginning to offset productivity-related headwinds.
“We expect demand commentary to stay soft in Q1FY27, as macro, AI and geopolitical overhangs continue to weigh on discretionary spending and decision-making cycles. We build in tepid quarter-on-quarter growth across our coverage universe for Q1FY27, with the soft start likely extending into Q2FY27 as well,” said Motilal Oswal.
While the recent rebound has improved sentiment towards IT stocks, analysts remain cautious about the near-term outlook. They believe the sharp correction has made valuations more attractive, but a sustained recovery will depend on improving demand, stabilising revenue growth and evidence that AI-led opportunities are beginning to offset productivity-related headwinds. As a result, the second half of FY27 is expected to be a key period for the sector.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
