Infosys, Wipro ADRs rebound 4% after 14% rout in two days. Time to rally on Monday?

After experiencing a significant selloff in the preceding days, Infosys and Wipro saw a recovery in their American Depository Receipts (ADRs) on Friday, with gains of 4% and 3% respectively. This rebound follows a steep decline of approximately 14.5% over two days, which wiped out around Rs 5.7 lakh crore from the IT sector and pushed the Nifty IT index down by 19%. The downturn was primarily driven by fears surrounding new AI tools, particularly from US startup Anthropic, which could disrupt traditional IT services by automating various legal tasks. Despite these concerns, JP Morgan has identified this as a potential 'deep value' buying opportunity, highlighting the essential role of Indian IT firms in the tech landscape. Analysts emphasize that while AI may change the industry, the need for skilled IT services remains critical. They recommend a strategic investment approach, focusing on established players like Infosys and TCS, which offer attractive dividend yields reminiscent of past market downturns. Experts believe that the current market conditions may present opportunities for recovery, as Indian IT companies adapt to evolving business needs driven by AI and outcome-based pricing models. Overall, market sentiment appears cautiously optimistic as investors look ahead to potential rallies in the coming week.