IT Stocks: After a 19% plunge, IT stocks rebounded by 4%? Find out what's happening and what will happen on Monday...: After a 19% crash, IT stocks have rebounded 4%. The big question is.

News Topical, Digital Desk : After two days of massive declines, the IT sector found some relief on Friday. While Infosys and Wipro's ADRs had fallen by up to 14%, they saw a sharp recovery of 3–4% on Friday. In eight trading sessions, the sector has lost ₹5.7 lakh crore in value, and Nifty IT has fallen 19%. The big question is: is this just a technical bounce, or will we see a real rally on Monday?

Two Days of Devastation, Then Bottom Fishing:
Investors were shaken by a 14.5% drop in Infosys and Wipro ADRs over two days. Buying returned at lower levels on Friday, and Infosys rose 4%, while Wipro rose 3%. This ended the week on a slightly stronger note.

But the losses are not small. In just eight sessions, the IT sector's market value fell by ₹5.7 lakh crore. IT bellwether stocks sank to a five-year low. Coforge, LTIMindtree, HCL Tech, and Mphasis also fell by up to 4%.

What's the real reason for the decline?
A major reason for the negative sentiment was a new tool from American AI startup Anthropic. The company, which makes the Cloud chatbot, launched a product for corporate legal teams that can automate tasks like contract review, NDA management, compliance workflows, and legal brief preparation. This has raised fears that AI could disrupt the services model and reduce the workload of traditional IT services companies.

Is the threat really that great? JP Morgan believes there's no need to panic. According to them, IT services companies are the "plumbers of the tech world"—that is, they are still responsible for actually running, integrating, and managing enterprise software. The brokerage says free cash flow and dividend yield have reached levels previously seen only during crises like the GFC and COVID. They recommend "deep value" buying in Infosys and TCS, and also keeping an eye on growth players like Persistent Systems and Sagility.

Business models are changing . Market experts told CNBC Awaaz that the situation is not as bad as it appears. Previously, companies billed on a time-and-cost basis; now they are moving towards an output- and results-based model. Through AI, companies are able to deliver faster, cheaper, and better. The meaning is clear: AI is not a threat, but could also be a new opportunity.

What to expect on Monday? Technically, after a 19% decline, short-covering and value buying create the possibility of a rally. However, a sustainable rally will only occur if US markets remain stable and fears about AI subside. Currently, indications are that the sector is in the "oversold" zone. In such a situation, a rise is possible on Monday, but the real trend will become clear only in the next few weeks.