Nifty IT Stocks 2026: Navigating the AI Storm, Budget Boost, and Top Analyst Picks
February 2026 has been a rollercoaster for Indian IT investors. If you’ve been tracking the Nifty IT index, you’ve likely experienced a mix of anxiety and opportunity. The sector is currently caught in a fierce tug-of-war between aggressive AI disruption fears and strong fundamental tailwinds from the Union Budget 2026.
Is this the right time to buy the dip, or is the worst yet to come? Here is your comprehensive, SEO-optimized guide to the state of Nifty IT stocks in 2026, featuring the latest price action, expert commentary, and specific stock recommendations.
The Current State of Play: A Sector Under Pressure (Feb 2026 Update)
As of February 12, 2026, the Nifty IT index has slumped to a near 10-month low. The sector has been the worst performer on the benchmark, extending losses after a disappointing 2025 .
The Hard Numbers:
Nifty IT Index: Declined ~12.6% in 2025, and an additional ~11-12% in just the first six weeks of 2026 .
TCS: Fell to a 52-week low of ₹2,766, slipping below the ₹10 lakh crore market cap mark for the first time since December 2020 .
Infosys & Wipro: Both dropped approximately 5% in a single session on February 12, hitting fresh 52-week lows .
The Exception: While most large-caps bled, Tech Mahindra bucked the two-year trend, gaining 19% over the last 24 months .
Why Are IT Stocks Falling? The "Double Whammy" of 2026
Investors are currently grappling with two distinct, yet simultaneous, headwinds:
1. The AI Existential Threat (The New Fear)
The narrative has shifted from "macro slowdown" to "structural disruption." The recent launch of advanced AI agents (such as Claude’s Cowork AI tool) has spooked global markets. Analysts suggest that AI automation directly targets the labour-heavy outsourcing models of Indian IT firms, potentially slashing billable hours .
Expert Insight: "It is too early to outright reject their comeback, but participants should keep exposure low," says Ajit Mishra of Religare Broking .
2. The US Rate Cut Mirage (The Old Fear)
Better-than-expected US jobs data (130,000 jobs added in January) has effectively pushed expectations of a Federal Reserve rate cut further into the future. Since the US contributes the majority of revenue for Indian IT, high interest rates mean clients continue to tighten discretionary spending .
The Silver Lining: Budget 2026 and Demand Revival
While the headlines scream "crash," the fundamentals on the ground tell a slightly different story. January 2026 brought two major catalysts.
Catalyst A: Government Support (Budget 2026)
The Union Budget 2026 delivered a significant structural gift to the IT sector. The government unified IT services under a single tax category and hiked the safe harbour threshold from ₹300 crore to ₹2,000 crore with a uniform margin of 15.5% .
Why it matters: This drastically reduces transfer pricing litigation and provides tax certainty. Wipro’s CFO noted this will "reduce the cost of compliance," while Nasscom called it a shift from "process-heavy compliance to trust-based governance" .
Catalyst B: The Q3 Earnings Signal
Contrary to the panic selling in February, Q3 FY26 results (announced in January) suggested a recovery was underway:
Infosys raised its revenue guidance for the second consecutive time .
HCLTech upgraded its services revenue guidance following record deal wins ($3 billion TCV) .
Deal Wins: TCS posted a healthy TCV of $9.3 billion, indicating that while clients are cautious, they are still signing cheques .
Nifty IT Stock Picks 2026: Experts vs. The Charts
If you are looking to build a portfolio, here is how the major players stack up according to brokerages and technical analysts post-Q3 results.
🏆 HCL Technologies: The "Best Balanced" Bet
The Consensus: Multiple experts peg HCL Tech as the strongest long-term compounder right now.
Why: Strong constant-currency growth, record deal wins, and a robust software portfolio. It offers the best mix of growth and margin visibility .
Technical View: Completed a 29-week cup-and-handle breakout, suggesting an upside toward ₹1,825–₹1,938 .
💰 Infosys: The Growth & Guidance King
The Consensus: The "growth-at-reasonable-valuation" play.
Why: Infosys delivered resilient Q3 numbers and has successfully anchored AI-led demand via the Infosys Topaz platform. It boasts stellar large-deal wins ($4.8 billion) .
Technical View: Structurally stronger than peers; gapped above the 1625 resistance level .
📈 Tech Mahindra: The Turnaround Story
The Consensus: The only Nifty IT stock to deliver positive returns over two years, and brokerages see more steam left.
Why: Recovery is visible in auto manufacturing, and the communication vertical is expected to improve. Targeting an EBIT margin exit of 13% by FY26 .
🛠️ Wipro: The Value/Turnaround Bet
The Consensus: A recovery candidate requiring patience.
Why: Margins expanded sharply to 17.6% (the best in years) due to cost optimisation. AI platforms (WINGS, WEGA) are contributing. However, revenue growth is still lagging .
Strategy: Suitable for investors willing to wait for the growth engine to catch up to the margin recovery .
📊 Mid-cap Spotlight: Coforge & Hexaware
Coforge: Motilal Oswal’s top mid-cap pick with a massive 51% upside target (₹2,500) . Aiming to close 20 large deals in FY26 .
Hexaware: Newly listed and on the radar. Demand trends in BFS and the integration of CyberSolve are key monitorables .
Summary: Strategy for 2026
The disconnect in February 2026 is stark: Panic selling vs. improving earnings guidance.
Don't Fight the Trend (Short-term): Technical analysts advise against "bottom fishing" yet. The Nifty IT index has breached critical supports (200-DEMA), and volume-based selling is evident. A "sell on rise" strategy is recommended until the index regains strength above resistance levels .
Accumulate on Weakness (Long-term): Valuations are attractive after the 2-year rout. The Budget 2026 tax reforms are a multi-year positive.
Stock Specificity: The days of buying any IT stock are over. The sector is splitting between margin-led recovery (Wipro) and growth-led compounding (HCL Tech/Infosys)
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