India’s IT services sector has fallen 25 per cent year-to-date, with the top four IT majors—TCS, Infosys, HCLTech and Wipro—down around 35-50 per cent from their past two-year peaks. The sharp decline and a pause in the AI trade have prompted Jefferies to tactically close its longstanding underweight stance on IT services and raise the sector to neutral.The brokerage said IT services stocks had borne the brunt of concerns around artificial intelligence. However, as the AI trade pauses, Jefferies sees scope for tactical upside in the sector, particularly after the large decline in stock prices.The top four IT majors are currently trading at 13-17 times price-to-earnings multiples, while revenue growth for IT stocks is expected to remain in the low-to-mid single digits over FY26-28E.Jefferies noted that the negative stock reaction to negative sector news has been much softer, indicating a tactical bottom.Jefferies said its interaction with more than 50 FPI investors suggested a positive change in sentiment towards India as the AI trade comes into question. It also noted that FPI flows have turned positive, while economic and corporate data points have surprised positively.As part of its tactical move, Jefferies added Infosys and raised its weight in Coforge in its model portfolio, taking its IT sector stance to neutral. The brokerage funded the move through weight trims in power, real estate and hospitals, while continuing to maintain large overweight positions in these sectors.“We add Infosys and raise weight in Coforge in our model portfolio, taking IT to neutral, funded by weight trims in power, realty and hospital - still remaining large OWTs,” it said.Jefferies also said it likes lenders, power, real estate and industrials.Published on July 27, 2026