The market sentiment around IT stocks on Dalal Street has been negative in 2026 and for good reason.
The AI scare has brought to light the serious weakness in the ‘traditional’ business models of IT companies, i.e., providing IT services.
However, the long-term picture is not one of doom and gloom. According to India Brand Equity Foundation (IBEF), India’s technology industry is on track to double its revenue to around Rs 43,100 bn (US$ 500 bn) by 2030.
Rising demand for AI-led solutions, cloud modernisation, and the rapid expansion of Global Capability Centres (GCCs) are expected to be key growth drivers.
In addition, the wide adoption of cloud services, cybersecurity, and data analytics will provide structural support to Indian IT firms over the long term.
But there is no denying that investors won’t feel any comfort due to this. The short term negativity is all they see right now.
And the war in the Middle East has only made the situation worse in terms of sentiment.
Now, the largecap IT stocks like Infosys, TCS, and the like, will survive this phase as they have done in the past, but what about the midcap and smallcap IT stocks?
Let’s examine three non-largecap IT stocks where prices have crashed.
There is no view or recommendation on any stock in this editorial.
#1 Accelya Solutions
This is an IT firm with a strong pressence in the global aviation industry.
Accelya Solutions partners with the airlines right from the time a ticket or an airway bill is issued, through its entire life cycle until the data is converted into actionable decision support.
The company’s forte is revenue accounting, revenue assurance, and cost management.
Over the years, the company has developed strategic partnerships and alliances with established associations, catering to a niche segment. It has built an impressive client roster with over 250 airline customers, travel agents and shippers worldwide.
Accelya Solutions Share Price – 3 Years
Source: Equitymaster
Now, there is nothing wrong with the fundamentals of this company. The company’s revenue and profits have grown steadily over the years. The return ratios and cash flows are strong and it’s a zero debt company like most IT companies in India.
In fact, even though many airline stocks have crashed due to the war in the Middle East, this stock has not fallen a lot recently.
However, the stock has been in a down trend for two years due to low revenue growth and stagnant profits. The war will make a recovery difficult as its fortunes are tied to the global aviation industry.
On the other hand, the company’s long term prospects are good. It also pays very good dividends.
#2 Coforge
The stock of Coforge (formerly NIIT Technologies) has crashed recently.
From about Rs 2,000 in December 2025, the stock has fallen 45% to around Rs 1,100 in three months.
The reason is simple. The market does not have confidence in the management’s AI strategy.
Coforge Share Price – 6 Months
Source: Equitymaster
The company has always been strong in its chosen domains but has struggled to expand into newer high-growth areas in the past.
Over the years, Coforge has grown through a series of acquisitions of various small IT companies to establish its presence across different industry verticals. This has resulted in a perception on Dalal Street that the company is not among the leaders in the Indian IT space.
After the covid-era growth boom ended for Indian IT firms, the management has tried very hard to establish Coforge as a leading player in the AI space, specifically enterprise AI.
The latest acquisition Encora is just the latest move in that direction. However, this acquisition (US$ 2.35 billion in an all stock deal) could result in equity dilution. Also, the company will pay Encora’s US$ 550 million debt.
Thus, in the short term, the sentiment may not improve but the company does has decent long term growth prospects, especially if it’s AI strategy works out favourably.
#3 Cyient
This is another stock that has disappointed investors.
Cyient is a global engineering and technology solutions company headquartered in Hyderabad, India.
The company operates across North America, Europe, Asia-Pacific, and India, serving more than 300 customers worldwide-including 30% of the world’s top 100 innovators.
Over the years, the company was reporting good growth. The company is also expanding in aerospace, connectivity, and new growth areas, including semiconductors and automotive electronics.
In April 2025, Cyient launched Cyient Semiconductors, a wholly owned subsidiary focused on scaling Application-Specific Integrated Circuit (ASIC) turnkey solutions.
It has also integrated AI and Generative AI (GenAI) extensively across its engineering, manufacturing, supply chain, compliance, and customer support workflows.
However, Dalal Street is not impressed because the company’s recent short-term growth has been flat. Essentially, the company’s revenue has not increased since the end of FY24.
The stock has been in a down trend since December 2023.
Cyient Share Price – 3 Years
Source: Equitymaster
The problems investors face here is that Cyient was considered a growth stock until 2024 but then the revenue stopped growing. This explains the performance of the stock price.
There are many reasons for this and the management is trying to resolve them. However, until there is clear progress visible in the reported numbers, the stock is unlikely to recover.
Having said all this, if the company gets its act together on the revenue front, profit growth should not be much of a problem.
And rising profits is the best antidote to a falling stock price.
Should You Consider Beaten Down IT Stocks?
The fate of IT stocks goes far beyond short term sentiment surrounding AI or the war in the Middle East. There is a very basic point to be made here: These companies have to deliver growth.
Indian IT companies that don’t pivot to AI-led, outcome-driven models will feel sustained pressure on growth and margins.
Now, all Indian IT companies claim they are already doing this but this needs to be visible in their financials. This is why Indian IT stocks have been under pressure for a while.
The ever increasing uses of AI is directly tied to the slowdown in technology spending in the western world. Partly this is explained by macro factors but the widespread use of AI is also playing its part.
Indian IT companies have invested considerable time and money to get the entire workforce AI ready so as to be prepared for this disruption. The industry’s future revenue growth will depend a lot on how it fulfils the demand for AI-related services in the face of intense competition.
And that will decide the stock prices of these companies.
Investors considering IT stocks should ideally broaden their horizons. Consider technology stocks as a whole, instead of limiting one’s options to just software.
Technology stocks are not just limited to the IT industry but encompass many other new technology company stocks.
Several other industries make up the technology space and companies are sprouting up in defence technology, semiconductors, and sustainable technology.
These are also newer fields like cybersecurity, AI and IoT as well. Technology applications are almost limitless and expanding into different areas.
Thus, keeping an open mind and digging deep into the ecosystem will likely result in more opportunities for an enterprising investor.
Investors should evaluate the company’s fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence before making investment decisions.
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