The Nifty IT Index is down over 23% so far in 2026. Right from the beginning of the year, tech stocks have been battered on concerns about AI disrupting jobs in the sector. Is the correction done now? Is it time to buy tech sector stocks now? Several brokerages have given a ‘Buy’ recommendation on a host of large-cap tech stocks. However, there are some pockets of concern still. 

‘Valuations very comforting’  

“Valuations are very comforting right now. Whatever negative news has come up till now, that is already in the price. If something new comes, then it is a different thing. That’s because it is a dynamic world and technology keeps changing very fast,” says Sumit Pokharna, VP and IT Analyst, Kotak Neo. 

He pointed out that “not all, but most of the large-cap IT companies are trading below their 10-year PE multiple. So one can look at these companies from a longer-term perspective. I am talking about Infosys which is very attractive at these levels. You can focus on TCS, which again has fallen down a lot, and valuations have become very attractive. Tech Mahindra looks good to us. We have been negative on Wipro for quite some time because of the underperformance on a relative basis.”

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According to him, “One can avoid Wipro for the time being and focus on Infosys, TCS and large cap. But focus more on large cap rather than going to mid caps right now. Now, coming to what the triggers are, why should one buy? The trigger is definitely first and foremost the decent valuations. Secondly, if you look, rupee depreciation is positive for them. And they are not getting directly impacted by the higher crude price because they have limited exposure to that extent.”

Wipro: What’s triggering the concern

Pokharna raised concerns about Wipro and there are others too. Jefferies, too, in its report with top investment ideas for India, has put out a cautious view on Wipro. They have an ‘Underperform’ rating on the stock with a target price of Rs 180 per share. This implies another 8% downside from current levels on the back of a subdued growth outlook.

According to Jefferies, “while Wipro is likely to benefit from a demand revival, we expect its underperformance Vs peers to persist. Over FY26-FY28, we expect Wipro to deliver 2% YoY revenue annually on a compounded basis,” Jefferies pointed out that this is the “lowest in our coverage universe.”

The brokerage house pointed out that the “FY26, FY27 EPS estimates are 3-4% below consensus,” and they see “limited scope for positive surprises to these estimates.”

‘Battle of narratives in stock market – Highly attractive valuations’

Another leading brokerage house, Nuvama is constructive on top-tier IT stocks. They believe, “the concerns have been amplified by the sharp stock reactions—first with global SaaS and now with IT services companies.” Nuvama has ‘Buy’ on all the top-ten IT Services stocks. 

The brokerage house pointed out that though they “maintain estimates and lower target multiples slightly to factor in risks from possible higher Gen-AI disruption,” they have upgraded HCL Technologies, Wipro, Tech Mahindra and Hexaware Technologies to ‘Buy’. However, they “prefer Coforge, LTIMindtree, Persistent, Mphasis, Infosys and TCS.”

‘Not the right time to buy IT’

Siddarth Bhamre, Head Institutional Research-Asit C. Mehta Investments Intermediates however, has a different view on the tech sector at the moment. He does not consider the current phase, as the perfect buying opportunity. He explained, “No, it’s not a right time to buy tech stocks. Now, it is possible that the pace of selling, which we have seen, might reduce, and there are multiple reasons for that. Tech has been underperforming markets for quite some time, and we have been negative.”

According to him, the valuation multiples went up significantly post-Covid because growth was very strong. “So large cap stocks were commanding PE of upwards of 25x and semi-large caps were commanding PE of upwards of 35-40x because their growth rate was very high. Now, that growth rate was coming down slowly,” he added. 

According to him, “we were seeing large cap growing at 1-3%, semi-large caps growing at 10-12% whereas the growth rate which was getting factored was much higher than 15-20%. So there was a derating, and then we saw that AI story coming into play which meant that forget about revival in growth; there is now a good possibility of degrowth happening in companies in terms of top line because I think enough has been discussed about AI and the impact of AI on IT companies.”

One thing is clear, he pointed out, “that the upside is quite limited to IT in the current scenario. It might stop falling for the time being. One reason for that is that a lot of people were selling IT, and now the market is offering other opportunities where people can go short. The short that was here might go to some other sector, and IT might fall less. But IT won’t increase much from here because the concerns of disruption remain.”

Conclusion

Therefore, if you are wondering if you should invest in IT stocks, experts have outlined some clear scenarios. Most are betting on select large cap technology sector stocks, and some believe that the cloud of uncertainty hasn’t quite moved away. The valuations, though reasonable at the moment, need to be assessed carefully on the basis of the company’s fundamentals.

Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.