Synopsis: Indian IT stocks rallied up to 3% as global tech shares rebounded after Anthropic announced collaborations with SaaS firms, easing AI disruption fears. Oversold valuations and short-covering further lifted sentiment across large- and mid-cap IT stocks.
Indian IT stocks had been under pressure amid fears that rapid advances in artificial intelligence could disrupt traditional software and IT services models, alongside concerns over weak global demand and discretionary spending cuts.
Heavy selling pushed the Nifty IT index into oversold territory. However, sentiment rebounded sharply after global tech stocks rallied, as AI firms signalled collaboration with established software players rather than displacement, triggering bargain buying and short-covering across the sector. The Nifty IT index has declined 20% over the past month and fallen 7% in the last week. It is currently trading around the 30,770 level.
What’s the News
Global technology stocks staged a relief rally after fresh developments in the artificial intelligence (AI) space eased fears of large-scale disruption to traditional software companies.
In the US, software majors such as Salesforce, DocuSign and ServiceNow gained up to 4% overnight. The rebound followed partnership announcements by Anthropic with several SaaS firms, signalling that AI players are increasingly collaborating with established software providers rather than displacing them. This shift in narrative helped calm investor anxiety around AI-led disruption and lifted sentiment for Indian IT stocks as well.
The rebound was broad-based across large-cap and mid-cap IT names. Heavyweights such as Infosys, Tata Consultancy Services, HCLTech, Wipro and Tech Mahindra rose up to 3.5%, while mid-cap players like Persistent Systems and Mphasis gained up to 4%. This move suggested renewed investor confidence across the sector rather than isolated stock-specific action.
Adding to the positive undertone, global brokerage Wedbush Securities described fears of AI-driven disruption as “overblown,” arguing that AI adoption is more likely to create incremental demand and efficiency gains for established IT service providers.
While near-term volatility linked to global macro trends and client spending patterns may persist, analysts broadly maintain that the long-term fundamentals of Indian IT companies remain intact, supported by strong order pipelines, digital transformation demand, and improving deal momentum.
IT Index Fall
The rally was amplified by extremely oversold conditions in the IT pack. Seven of the 10 constituents of the Nifty IT index have declined more than 20% so far in 2026, dragging the index toward its steepest monthly fall since 2003.
Persistent selling pressure driven by global slowdown concerns, weak discretionary spending trends, and AI-related uncertainty had pushed valuations to stressed levels. Analysts noted that such excessive negativity often sets the stage for technical rebounds as bargain hunters step in at attractive price points.
The sharp correction earlier this week also created room for a relief rally. Tuesday’s sell-off erased nearly Rs. 1.2 lakh crore in market capitalisation, with eight of the top 10 losers on the Nifty 500 coming from the technology segment. The intensity of the decline indicated panic-driven unwinding rather than a structural decline in fundamentals, prompting short-covering and fresh buying once global cues turned supportive.
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