New Delhi, February 24: It has been a turbulent start to 2026 for the Indian Information Technology (IT) sector on both the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). Following a peak in late 2025, the Nifty IT index has experienced a significant correction, leaving retail and institutional investors alike wondering: when will the IT share market finally rebound?

While predicting the exact day of a market flip is impossible, current financial data, analyst forecasts, and global macroeconomic trends point toward a solid timeline. The consensus? The IT market will likely remain volatile and range-bound in the short term, with a gradual, sustainable recovery expected in the second half of 2026 (H2 2026). Why Did IBM Stock Price Fall 13% Today, February 24?

Here is a deep dive into the factors currently dragging the market down, how individual stocks are performing, and what catalysts will eventually spark a rally.

The Headwinds: Why Are IT Shares Currently Struggling?

The Nifty IT index saw a sharp sell-off in early 2026, dropping over 30% from its December 2025 highs. This dip is not without reason; it is primarily driven by three major headwinds:

  • The AI Disruption Fear: There is a heavy market debate surrounding Generative AI. Investors fear that sophisticated AI tools will automate traditional IT managed services, which make up 22–45% of revenue for many Indian firms. This anxiety over potential margin compression has triggered a massive sell-off.

  • US Tariffs & Geopolitics: The US is the primary market for Indian IT. Recent shifts in US policy, including new tariffs on Indian imports and tightening H-1B visa restrictions, have created immense uncertainty. Consequently, global clients are hesitant to sign off on large, discretionary tech budgets.

  • Valuation Recalibration: Throughout 2025, IT stocks traded at premium valuations that outpaced their actual earnings growth. The current market is undergoing a necessary "reality check," bringing price-to-earnings (P/E) ratios back to their historical averages through severe de-rating.

The Data: Indian IT Stocks and Analyst Forecasts (Feb 2026)

Major global brokerages, including Jefferies and CLSA, have recently issued sweeping downgrades across the Indian IT sector. Because of concerns over high valuations and AI disruption, many analysts have cut their target prices.

Here is how the top Nifty IT constituents are currently faring:

IT Stock (Company) Approx. Price (₹) Recent Change Analyst Target Price & Market Outlook
Infosys 1,328 ▼ -1.90% INR 1,290 (Jefferies - Hold). While Jefferies cut the target, CLSA still names it a top large-cap pick for a long-term macro recovery.
HCL Technologies 1,423 ▼ -0.94% INR 1,390 (Jefferies & ICICI Securities - Hold/Reduce). Near-term consensus is cautious, despite some higher domestic targets.
Tata Consultancy Services (TCS) 2,678 ▼ -0.32% Facing broad downgrades amid the sector sell-off. Analysts expect a slow grind upward rather than an immediate jump.
Tech Mahindra 1,444 ▼ -0.92% No specific target consensus, but CLSA highlights it as one of their preferred large-cap defensive picks amidst volatility.
LTIMindtree 4,825 ▼ -1.33% Rating reduced to "Underperform" by Jefferies, citing near-term growth pressures.
Mphasis 2,304 ▼ -2.96% INR 2,450 (Jefferies - Hold). Rating was recently lowered from Buy to Hold.
Coforge 1,292 ▼ -3.61% CLSA's highest-conviction pick. It maintains an "Outperform" rating, seeing it as a strong mid-cap growth story.
Persistent Systems 4,989 ▼ -2.04% CLSA continues to favor it as a top mid-cap pick, expecting it to outpace large-cap peers in growth.
Wipro 205 ▼ -2.29% Trading at heavily discounted valuations compared to its peers. Viewed by analysts as a long-term turnaround value play.
Oracle Fin. Services (OFSS) 6,610 ▼ -0.49% Upgraded to "Prime" status by some domestic screeners; offers a solid dividend yield that acts as a buffer against drops.

Disclaimer: Stock prices are highly volatile. Target prices represent 12-month forward-looking estimates by financial institutions as of late February 2026.

The Catalysts: When Will the Sector Rise and What Will Drive It?

Most financial analysts suggest that while the "worst may be over," a return to pandemic-era double-digit growth is unlikely in the immediate future. The rise will be a slow, steady climb catalyzed by the following factors:

The Shift from AI Pilots to AI Payoffs (Mid to Late 2026)

The very technology causing the current panic will likely become the sector's biggest growth driver. Major players like TCS and Infosys have upskilled hundreds of thousands of employees in GenAI. As global clients transition from merely testing AI to deploying it at scale, Indian IT companies will begin seeing substantial revenue flow from these high-value, transformative projects.

Return of US Discretionary Spending (H2 2026)

The US economy is expected to find firmer ground later in the year. If inflation cools and the Federal Reserve enacts favorable interest rate cuts, global banks, retail giants, and healthcare companies will unfreeze their tech budgets and resume spending.

Strong Mid-Cap Performance

While large-cap giants might see slower, single-digit growth in the near term, mid-cap IT companies like Coforge and Persistent Systems are already demonstrating faster growth rates and resilience. This outperformance in the mid-cap space could help lift the broader sentiment of the entire sector.

Key Events for Investors to Watch

If you are waiting on the sidelines for a definitive signal that the tide is turning, mark your calendar for the Q4 FY25 earnings reports starting in early April 2026 (TCS typically kicks this off around April 10). Stock Market Today: Nifty, Sensex Open Lower as US Sell-off Amid Tariff, AI Concerns; IT Stocks Tanked More Than 2%.

Investors should look beyond the raw numbers and pay close attention to the management commentary regarding their deal pipelines and forward-looking revenue guidance for FY27. For now, analysts recommend looking toward mid-cap stocks for immediate growth potential, while treating large-caps like Infosys and Tech Mahindra as safer, defensive bets to weather the current storm.

(The above story first appeared on LatestLY on Feb 24, 2026 12:29 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).