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Informist, Friday, Mar. 13, 2026

MUMBAI – Shares of information technology companies are expected to fall more next week as investors adopt a risk-off approach amid the war in West Asia. However, analysts said the correction in information technology stocks in February – driven by fears that artificial intelligence tools could hurt growth prospects – has made their valuations more comfortable. Fears about artificial intelligence have also eased, as brokerages see domestic IT firms adding AI-related enhancements to their own offerings, helping to increase contract sizes over the medium to long term.

The Nifty IT index is emerging from a painful transition marked by weak discretionary spending, AI-led deflationary fears, H1-B visa regulations, and a Claude-driven selloff in February, Anand Rathi Share and Stock Brokers said. The brokerage sees the IT sector benefiting from AI tailwinds as the AI business cycle shifts from capacity building to demonstrating returns, a move it says is inherently beneficial for technology service companies.

The top-five AI hyperscalers have hit around $410 billion in capital expenditure in 2025, and they are guiding around $705 billion in capex for 2026. This has resulted in scrutiny of the return on investments for these AI-related expenditures, pushing enterprise spend towards AI deployment, integration, governance, and legacy modernisation, Anand Rathi said. Infosys and HCL Technologies' deal with Anthropic, and Tata Consultancy Services' collaboration with OpenAI, are proof that global firms are eyeing higher returns from their large AI-related expenditures, it added. Anand Rathi drew historical parallels with heavy investments in railways and fibre-optics to argue that business builders overinvest first, then rents collapse as supply arrives, and the winners are those who monetise installed capacity without risking their balance sheets.

Nuvama Institutional Equities is positive on the domestic information technology sector in the medium- to long-term, although near-term volatility is expected to persist. The earnings downgrade cycle has bottomed out for the sector with limited scope for any further cuts, it said. The brokerage said it sees no existential threat to the sector from generative artificial intelligence, as the need for a system integrator that can customise an enterprise's plug-and-play software inputs and outputs to meet its requirements will always exist.

Over the medium- to long-term, generative AI is likely to create a mammoth incremental opportunity for IT Services companies, Nuvama said. In one to two years, when generative AI reaches the 'early adopters' phase, domestic IT companies will shift to include AI offerings and hit the scene with the same delivery capability at a lower cost and better delivery. Several analysts said that the experience of domestic IT companies in dealing with foreign players, along with their timely execution, will make them preferred picks for AI services and AI integration projects.  

This week, the Nifty IT index ended 3.5% lower at 29071.25 points. The Nifty IT index is gradually heading toward the 28500–28000 levels, which are likely to act as immediate support, Vipin Kumaar, technical and derivatives analyst at Globe Capital Markets, said. Any bounce up to 30650 to 31000 levels will likely attract seller interest, the analyst added.

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The following are the resistance and support levels for key IT stocks for next week as per calculations based on their prices on the National Stock Exchange:

End

Reported by Eshitva Prakash

Edited by Saji George Titus

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