<p>As on February 20, 2026, the Nifty IT index saw a sharp fall of around -16% in a month and has overall fallen by around -30% from its all-time highs made in December 2024. This fall is based on the fears of global AI innovative technologies disrupting the Indian IT sector which is mainly service driven which in turn could affect future growth, revenues, and jobs. FIIs sold over Rs 10,956 crore from the IT sector in first half of February 2026 alone reallocating to other sectors and US-listed pure AI. This clearly points out weak market sentiments towards the Indian IT sector and the sentiments could remain weak till companies and the sector shows a clear executionary road map of change towards innovation and adaptability of AI technologies to protect and boost revenue growth.</p>.<p>The Indian IT sector is not going to die as global technological fears have been present in the past as well. The pain of correction has been sharp as the AI technological transition has been much quicker this time. There are no doubts AI technologies will change a lot of things like the way companies hire, the way they train and the way they deploy & execute technologies but at the same time technology does not eliminate the need for experts, it usually upgrades their toolkit and AI will make them faster, smarter, and scalable.</p>.<p>Indian IT companies have displayed good earnings growth in Q3FY26 despite seasonally weak conditions and the large cap companies are cash rich thus all steps will be taken in line with the global technological changes to protect and boost revenue growth. Looking at our strong corporate leadership, political will, and the sheer size of our talent pool the Indian IT sector is only expected to thrive and grow. We expect momentum to set in as AI services demand begins to inflect into 2026. Large IT companies may take some time to adapt but mid and small Indian ones may adapt quickly and scale up fast.</p>.Why B-schools must embrace public policy .<p>The Indian IT sector is trading at a P/E ratio of 22.1x, near its 10-year average of 21.6x as on January 31, 2026 and with the sharp price fall seen in the month of February 2026 valuations have dropped below its 10-year average making both prices and valuations very attractive. The current drawdown of the Nifty IT index from its all-time highs along with attractive valuations suggests very good investment opportunity from a tactical bet point of view.</p>.<p>Broadly the Nifty IT index has been consistent on a 5-year daily rolling returns basis generating an average return of 15.5% CAGR and delivering >=12% CAGR returns 70% and >=15% CAGR 53% of the time since 2004 as on 2026 but the sector has also been cyclical and volatile from time to time displaying sharp drawdowns of around -55% in CY 2008 and -33% in 2020. Thus, even from these attractive levels a minimum 5-year investment period is essential. Any investment made in the IT sector should be a tactical call and exiting at the right time is very important.</p>.<p>Individual companies may rise and fall but sectors thrive and grow thus rather than betting on individual companies it is wise to bet on the overall IT sector through active and/or index mutual funds. For a long-term bet choose an active fund and for short to medium term tactical bet choose an index fund. Choose active sectoral funds carefully as certain active funds have displayed out performance and some have not vs its index. Follow lumpsum buy on dips strategy and do not go overboard, stick with 5-7% tactical exposure. Please keep in mind that sectoral bets are for investors who can take high risk and understand market cycles.</p>.<p><span class="italic">(The writer is the founder of Rupee With Rushabh Investment Services)</span></p>
<p>As on February 20, 2026, the Nifty IT index saw a sharp fall of around -16% in a month and has overall fallen by around -30% from its all-time highs made in December 2024. This fall is based on the fears of global AI innovative technologies disrupting the Indian IT sector which is mainly service driven which in turn could affect future growth, revenues, and jobs. FIIs sold over Rs 10,956 crore from the IT sector in first half of February 2026 alone reallocating to other sectors and US-listed pure AI. This clearly points out weak market sentiments towards the Indian IT sector and the sentiments could remain weak till companies and the sector shows a clear executionary road map of change towards innovation and adaptability of AI technologies to protect and boost revenue growth.</p>.<p>The Indian IT sector is not going to die as global technological fears have been present in the past as well. The pain of correction has been sharp as the AI technological transition has been much quicker this time. There are no doubts AI technologies will change a lot of things like the way companies hire, the way they train and the way they deploy & execute technologies but at the same time technology does not eliminate the need for experts, it usually upgrades their toolkit and AI will make them faster, smarter, and scalable.</p>.<p>Indian IT companies have displayed good earnings growth in Q3FY26 despite seasonally weak conditions and the large cap companies are cash rich thus all steps will be taken in line with the global technological changes to protect and boost revenue growth. Looking at our strong corporate leadership, political will, and the sheer size of our talent pool the Indian IT sector is only expected to thrive and grow. We expect momentum to set in as AI services demand begins to inflect into 2026. Large IT companies may take some time to adapt but mid and small Indian ones may adapt quickly and scale up fast.</p>.Why B-schools must embrace public policy .<p>The Indian IT sector is trading at a P/E ratio of 22.1x, near its 10-year average of 21.6x as on January 31, 2026 and with the sharp price fall seen in the month of February 2026 valuations have dropped below its 10-year average making both prices and valuations very attractive. The current drawdown of the Nifty IT index from its all-time highs along with attractive valuations suggests very good investment opportunity from a tactical bet point of view.</p>.<p>Broadly the Nifty IT index has been consistent on a 5-year daily rolling returns basis generating an average return of 15.5% CAGR and delivering >=12% CAGR returns 70% and >=15% CAGR 53% of the time since 2004 as on 2026 but the sector has also been cyclical and volatile from time to time displaying sharp drawdowns of around -55% in CY 2008 and -33% in 2020. Thus, even from these attractive levels a minimum 5-year investment period is essential. Any investment made in the IT sector should be a tactical call and exiting at the right time is very important.</p>.<p>Individual companies may rise and fall but sectors thrive and grow thus rather than betting on individual companies it is wise to bet on the overall IT sector through active and/or index mutual funds. For a long-term bet choose an active fund and for short to medium term tactical bet choose an index fund. Choose active sectoral funds carefully as certain active funds have displayed out performance and some have not vs its index. Follow lumpsum buy on dips strategy and do not go overboard, stick with 5-7% tactical exposure. Please keep in mind that sectoral bets are for investors who can take high risk and understand market cycles.</p>.<p><span class="italic">(The writer is the founder of Rupee With Rushabh Investment Services)</span></p>