IT Sector: Kotak flags higher Gen AI disruption risk, cuts fair value – TCS, Infosys among top picks

The Information and technology stocks have been in the eye of the storm. The Nifty IT Index is down 20% so far in 2026, but is the pain done? Well, Kotak Institutional Equities has cut its fair values across companies under its coverage and sees “increasing risks even as the current adoption rates align with our (Kotak Institutional Equities) expectations.”

Kotak Institutional Equities expects a weak transmission of tech spending growth to services to continue, leading to moderate industry growth in the next several years. They estimate higher Gen AI-driven revenue deflation of 3–3.5% for FY27-FY28. This is higher than their previous expectation of 2-3% deflation.