IT rebounds, but AI clouds large-cap outlook

Sumit Pokharna, SVP-fundamental research at Kotak Securities, said the recent outperformance largely reflects buying after the sharp correction earlier in the fiscal had priced in much of the bad news. Earnings growth, however, could remain muted in the second quarter and over the next two quarters of FY27, he said.

Kuber Chauhan, research analyst-IT at Axis Direct, said the recovery appears to have been driven by sharp valuation compression, easing fears over AI disruption and early signs of stabilisation in enterprise technology spending.

There are also some green shoots on the operating front. Ashwin V, partner for executive engagement at Everest Group, pointed to better-than-expected earnings, margin improvement following restructuring and the launch of advanced AI projects by leading companies. However, he cautioned that it was still too early to conclude that the sector had stabilised.