IT valuation gains hinge on a recovery in growth
Jefferies said Indian IT stocks may see limited valuation gains without a recovery in revenue growth, although stable expectations and resilient global AI spending sentiment could support rerating. OI Charts data showed short futures build-ups in TCS and Wipro.
after close1 source ↓machine-written, see hownot a recommendation
- TCS close
- ₹2,461
- On the day
- -0.17%
- Futures OI, short build-up
- +8.4%
- Put-call ratio
- 1.24
- Max pain
- ₹2,300
Indian IT stocks could see additional valuation gains only if revenue growth expectations remain stable and concerns around global artificial intelligence spending do not worsen, Jefferies said in a report dated 20 Oct 2026. The brokerage said the recent sector rally has been driven mainly by improved investor sentiment around long-term growth prospects, rather than upgrades to revenue or earnings estimates. 💻
Key Points:
• Jefferies said large IT companies are currently pricing in growth that is 2–4 percentage points below their historical levels.
• A lack of further disappointment in growth expectations, together with stable sentiment around global AI capital expenditure, could support a price-to-earnings rerating.
• Further valuation expansion remains constrained unless the sector’s underlying growth outlook improves, according to the brokerage.
OI Charts data showed a mixed derivatives setup on 19 Oct 2026. TCS closed at ₹2,461, down 0.2% on the day, after gaining 15.8% over five sessions and 16.9% over 20 sessions. Its futures open interest rose 8.4% in a short build-up, while the futures contract traded at a 0.28% discount to the underlying. The put-call ratio was 1.24, with the largest call open interest at ₹2,500 and the largest put open interest at ₹2,100. The ₹2,300 max-pain level points to the market’s key expiry reference for the 27 Oct 2026 contract.
Wipro closed at ₹182.14, down 1.2% on 19 Oct, despite five-session and 20-session gains of 12.6% and 9.2%, respectively. Futures open interest increased 5.7% in a short build-up, with a 0.07% premium. Its put-call ratio stood at 1.12, while the largest call and put open interest were at ₹190 and ₹170. Max pain was ₹175 for the same 27 Oct expiry.
The sector’s next directional signal depends on whether companies show a recovery in client spending, deal conversion and revenue growth, while global AI investment remains an important sentiment variable. Traders will also watch the ₹2,500 and ₹2,100 open-interest levels for TCS and the ₹190 and ₹170 levels for Wipro as the expiry approaches. The recent gains provide a stronger base for sentiment, but the derivatives data shows fresh short positioning alongside the rally. ⚖️
Source: The Tribune, 21 Oct 2026
Not investment advice. For informational purposes only.