Infosys, TCS, HCL Tech Shares Surge Amid Market Weakness, But Can Rally Persist?

IT Stocks Rise Despite Broader Market Decline

On Friday, March 6, the Nifty IT index jumped by almost 2%, bucking the trend of a 0.6% decline in the benchmark Nifty. The Indian stock market was trading on a weak note, reflecting subdued global market sentiment due to the ongoing US-Israel-Iran conflict. The Sensex fell by over 500 points, with the Nifty trading around 24,650.

Top gainers in the IT sector included Persistent Systems, which rose by 3%, followed by Mphasis, which added 2%. Other notable gainers included Coforge, Oracle, HCL Tech, Tech Mahindra, LTIMindtree, Wipro, and TCS, each advancing by over 1%. Infosys also rose by 0.8%.

Recent Correction and Valuations

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The recent rebound in IT stocks comes after a sharp correction last month, when the Nifty IT index plunged by over 19% due to concerns over AI-driven disruption in the IT services sector. The correction has led to a meaningful cooling of valuations across the sector, bringing several IT stocks closer to more reasonable levels after a prolonged period of premium pricing.

Investor Sentiment and Market Outlook

With the broader equity market facing pressure from global uncertainties and geopolitical tensions, the IT sector is increasingly being viewed as a contrarian opportunity by investors. The correction has improved the risk-reward profile of many IT stocks, prompting some market participants to selectively accumulate them even as overall market sentiment remains cautious.

Brokerage House Views

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JM Financial believes that FY27 should be better for the IT sector than FY26, with most companies having defended margins in a tough environment. However, sustaining margins amid higher investments in technology will be challenging unless supported by currency movement. The brokerage prefers Infosys in the top 6, Mphasis in the mid-tiers, and Sagility among BPO names.

Choice Broking, on the other hand, noted that AI is reshaping the IT services landscape, but enterprise complexity, governance requirements, and integration challenges are expected to moderate the pace of disruption. The brokerage recommends COFORGE, PSYS, HAPPSTMN, and KPITTECH as long-term investment ideas.