The Nifty IT index significantly underperformed the benchmark Nifty 50 in calendar year 2025, highlighting a sharp divergence within Indian equity markets. While the Nifty 50 gained 10.51%, the Nifty IT index declined 12.6%, reflecting sustained pressure on information technology stocks amid global uncertainty.
Most major IT companies, including TCS, Infosys, HCL Tech, Wipro, LTIMindtree and Tech Mahindra, ended 2025 with double-digit losses, weighed down by muted discretionary spending, cautious enterprise technology budgets and prolonged macroeconomic challenges in key overseas markets.
However, after the extended correction, market observers note that value is beginning to emerge in the IT sector, supported by structural shifts in demand rather than a purely cyclical rebound.
A key driver behind this transition is the rapid adoption of artificial intelligence (AI)-led services. Large Indian IT firms are witnessing a clear improvement in the quality of deal wins, with a significant portion of new contracts now linked to AI-driven solutions, including generative AI, machine learning, analytics, intelligent automation and agent-based workflows. This change indicates a move away from the demand slowdown seen over the past few years and improves medium-term revenue visibility.
Despite lingering global macroeconomic risks, geopolitical uncertainties and cautious IT spending, sustained investments in AI, cloud migration, data platforms and cybersecurity are helping the sector maintain earnings stability and support gradual margin expansion.
Industry projections suggest that growth in Indian IT services is likely to improve to the mid- to high-single-digit range over FY26–FY27, supported by AI-led deal ramp-ups and vendor consolidation. India’s overall IT spending is also expected to cross $176 billion by 2026, which could benefit large, scalable players with strong execution capabilities.
After a challenging 2025, the sector appears to be entering a phase where structural digital transformation, rather than short-term demand cycles, will shape performance. The evolving focus on AI and high-value digital services marks a potential turning point for Indian IT companies as they adapt to changing global technology priorities.
Disclaimer:
This article is for informational purposes only and does not constitute investment advice. Market conditions can change rapidly, and investors should consult certified financial advisors before making any investment decisions.
