The Nifty IT index is currently trading with losses of up to 1% on Friday (September 6). The index recently scaled a fresh high of 43,299.50 buoyed by an improvement in demand environment and stabilisation of uncertainties in major global economies. However, the index has cooled off after making new highs.

On year-to-date basis, the Nifty IT index has delivered a return of 19.51%, outpacing Nifty50 returns, which stood at around 14.68%.

Global brokerage firm Morgan Stanley’s outlook on the information technology (IT) sector highlights a key debate: whether the current rally is overdone and if investors should lighten their ‘overweight’ positions.

The foreign brokerage’s stance is that it’s not time yet, as they believe a continued cycle of revenue upgrades should sustain high valuations.

An uptick in BFSI (banking, financial services, and insurance) spending is expected to keep high growth expectations for the financial year 2026 intact. Morgan Stanley mentioned that company-specific factors will support further outperformance.

LTIMindtree Ltd. could benefit from an improving deal conversion ratio, stabilising margins, and gains in wallet share, while HCL Technologies Ltd.’s limited deal wins keep its outlook softer.

Here is Morgan Stanley’s recommendation on the IT sector:

TCS – The brokerage has an ‘overweight’ recommendation on the stock but revised its price target upward to ₹4,910 per share.

Infosys – The brokerage has an ‘overweight’ recommendation on the stock but revised its price target upward to ₹

2,150 per share.

HCL Technologies – Morgan Stanley has downgraded the stock to ‘equalweight’, with a price target of ₹1,840 per share.

LTIMindtree – The brokerage has upgraded its recommendation to ‘overweight’, and also raised its price target to ₹7,050 per share.

Wipro – Morgan Stanley has an ‘Underweight’ rating on the stock but raised the price target to ₹500 per share.

Tech Mahindra – The brokerage has an ‘equalweight’ rating on the stock but revised its price target higher to ₹1,680 per share.

L&T Technology Services – The brokerage has upped its price target on the stock to ₹4,730 per share.

Tata Elxsi – The price target has been raised to ₹6,860 per share.

Mphasis – The brokerage has upped its price target on the stock to ₹3,200 per share.

Cyient – The price target has been raised to ₹1,650 per share.

Coforge – The price target has been upped to ₹7,825 per share.