Nuvama Turns Bullish on IT Sector, Sees Major Upside in 2026

Brokerages Signal Confidence in Indian IT Sector

Following a significant correction in stock prices, Nuvama Institutional Equities has issued a 'Buy' rating on all top 10 Indian IT services companies. The brokerage firm highlighted that valuations across the sector have become highly attractive, presenting a favorable entry point for investors. This bullish stance comes despite near-term concerns surrounding the impact of artificial intelligence and seasonal headwinds expected in the March quarter earnings.

Nuvama's renewed optimism reflects a broader sentiment among analysts that the sector is poised for a recovery. The firm has expressed a preference for several key players, including Coforge Ltd, LTIMindtree Ltd, Tech Mahindra Ltd, Mphasis Ltd, Persistent Systems Ltd, Infosys Ltd, and Tata Consultancy Services Ltd (TCS).

Top Picks and Price Targets

Several brokerage houses have identified specific companies as their top picks, signaling strong conviction in their growth prospects. Nuvama, CLSA, and Motilal Oswal Financial Services (MOFSL) have all pointed to certain stocks they believe will outperform.

Nuvama has set ambitious price targets, suggesting potential upsides ranging from 14% to 84% over the next 12 to 15 months. Their targets include Rs 2,100 for Coforge, Rs 6,100 for LTIMindtree, Rs 1,650 for Tech Mahindra, and Rs 3,300 for TCS.

MOFSL has also shown a preference for HCL Technologies and Tech Mahindra among large-cap stocks, while naming Coforge as its top mid-cap pick. The firm cited HCL Tech's position as the fastest-growing large-cap IT firm and Coforge's strong executable order book as key reasons for its positive outlook. Similarly, CLSA identified Persistent Systems and Coforge as its top high-conviction bets.

March Quarter Growth Expectations

For the immediate March quarter, performance is expected to be mixed. Nuvama anticipates sequential constant currency (CC) growth to range from -1.7% to 4.1% across firms. Among Tier-1 companies, TCS is projected to lead with a 1.2% QoQ growth, while Infosys and HCL Tech may see declines due to seasonal factors.

In contrast, Tier-2 companies are expected to continue their outperformance. Persistent Systems is forecast to lead this pack with 4% QoQ growth, followed by Mphasis (2.3%) and Coforge (2.0%). This trend highlights the agility and specialized focus of mid-tier players in the current market environment.

The Valuation Argument

The core of the bullish thesis rests on valuations. A sharp correction in IT stocks over the past few months has brought their prices to levels that many analysts consider compelling. JM Financial noted that a key investor concern is whether Indian IT valuations will converge with their global peers like Accenture and Cognizant, which currently trade at lower forward earnings multiples. However, the consensus from firms like Nuvama is that the current prices offer a significant margin of safety and potential for appreciation.

Navigating the AI Landscape

Artificial intelligence remains a central theme, viewed as both a short-term risk and a long-term opportunity. While concerns about AI-driven disruption contributed to the market correction, brokerages do not see immediate pricing pressure in contract renewals. Looking ahead, the industry is transitioning from navigating initial revenue pressures to capitalizing on a vast new market. Nuvama estimates the AI services opportunity could reach between $100–$100 billion by 2030, positioning Indian IT firms to capture significant growth.

Outlook for 2026 and Beyond

The Indian IT services sector is widely expected to begin a growth recovery in 2026, following a muted period from 2022 to 2025. The current environment is seen as a transitional phase where companies are adapting to new technological demands and macroeconomic conditions. For investors, the analysis from leading brokerages suggests that the recent downturn has created an opportunity to invest in fundamentally strong companies at attractive prices. The focus is shifting from near-term challenges to a long-term growth story powered by digital transformation, cloud adoption, and the expanding role of artificial intelligence.