Infosys Stock May 18: IT Sector Rebounds on Value Buying

India’s IT sector has faced intense selling pressure as investors worry about AI-driven disruption and slowing US tech spending. Infosys, TCS, and HCL Tech have all touched 52-week lows, triggering heavy foreign investor outflows. However, recent market action tells a different story. The Nifty IT index surged 2.75% on Friday, snapping a four-day losing streak as value buyers stepped in. Brokerages now back select IT stocks despite sector headwinds, signaling that oversold valuations may present a compelling contrarian trade for patient investors.

Why IT Stocks Crashed to 52-Week Lows

Markets panicked over fears that advanced AI could automate work traditionally done by IT services companies, compressing billing rates and deal sizes. Macro headwinds like slowing US tech spending and potential tariffs spooked foreign investors, triggering heavy selling. Concerns about AI disruption and tariff uncertainty have weighed heavily on sentiment, pushing valuations to multi-year lows.

The Rebound: Value Buying Signals Recovery

On Friday, all 10 Nifty IT constituents traded in green as value buyers emerged. Persistent Systems gained over 3%, while Infosys and Tech Mahindra advanced 2.79% and 2.31% respectively. The IT index’s 2% rally snapped four consecutive losses, suggesting institutional investors are accumulating at depressed levels.

Q4 Results Tell a Different Story

Despite market panic, Q4 FY26 results from major IT firms show resilience beneath the surface. Strong earnings and steady guidance suggest the sector’s fundamentals remain intact despite near-term headwinds. Brokerages backing select IT stocks believe current valuations fail to reflect long-term growth potential and stable cash flows.

Is This India’s Best Contrarian Trade?

At 52-week lows, IT stocks offer attractive entry points for contrarian investors with a multi-year horizon. Brokerages continue backing select IT names despite sector slump, citing oversold conditions and recovery potential. The combination of depressed valuations, solid fundamentals, and value buying momentum creates a compelling risk-reward setup.

Final Thoughts

India’s IT sector has shifted from panic selling to selective value buying, with the Nifty IT index rebounding 2.75% as institutional investors accumulate at 52-week lows. While AI disruption and macro headwinds remain real concerns, strong Q4 results and broker support suggest oversold valuations may present a genuine contrarian opportunity. Patient investors should monitor earnings quality and guidance before committing capital to this beaten-down sector.

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The content shared by Meyka AI PTY LTD is solely for research and informational purposes.  Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.