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Informist, Thursday, Apr. 02, 2026

MUMBAI – Shares of information technology companies are seen in range next week as the market is likely to remain volatile amid no signs of end to the war in West Asia. While investor sentiment will broadly be guided by developments related to the war, IT stocks may offer some refuge to investors looking to protect their gains, analysts said. Fears within the sector that artificial intelligence tools are lowering the value of contracts for IT players led to a sharp decline in technology stocks in February, making their valuations comfortable now. Near-term revenue compression from these AI tools is likely, but analysts see higher contracts from implementation-related jobs for these companies in the medium-to-long term.

"We expect a 4–5% revenue deflation for IT companies in the upcoming quarters due to disruption from artificial intelligence," Kunal Bajaj, an IT research analyst at Choice Institutional Equities, said. The AI disruption, according to the analyst, will manifest in the form of lower total contract value for IT majors in the initial years. Clients will be asking these companies to pass on the benefits of lower project costs, owing to AI efficiency, Bajaj said. "However, this deflationary impact on revenue will be offset by a 3–4% TCV (total contract value) gain from new AI services," he added.

Most large language model makers such as Claude and OpenAI have said they are focussed on software development and not implementation, several analysts said. They expect domestic IT services to get these implementation contracts as global AI giants churn out more models, driving up demand for software environments compatible with newer models.           

The financial performance of IT companies in the March quarter will be muted, but the year-on-year growth trajectory will be stable to improving, Kotak Securities said in a report. A sharp depreciation of the rupee against the dollar means many IT companies will report double-digit on-year net profit growth, it added. The brokerage expects Infosys to guide for 3–5% revenue growth for 2026–27 (Apr-Mar) with stable margins. HCL Technologies is also likely to guide for 3–5% overall growth along with a 50-basis-point expansion in its earnings before interest and tax for FY27, Kotak Securities said. 

The IT companies' March quarter results will also be helped by the absence of furloughs, particularly in the banking, financial services and insurance vertical, and retail, although this will be partly offset by a lower number of working days. The financial services vertical is likely to lead growth sequentially. Tata Consultancy Services will likely lead revenue growth among Tier-1 companies and Persistent Systems will lead the charge among mid-tier companies, according to Kotak Securities.

In this holiday-truncated week, the Nifty IT index ended 2.6% higher at 30441.45 points, rising the most among sectoral indices. "Until the index rises above 31500 levels, my advice will be to sell-on-rise," Rupak De, technical analyst at LKP Securities, said. He added that the overall sentiment appears negative on the technical charts.

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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 Tanima Banerjee

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