After a prolonged phase of narrow market movement and selective sectoral leadership, investors are increasingly reassessing where fresh opportunities could emerge as India heads into 2026. While metals, auto stocks, PSU banks and financial services have dominated returns over the recent past, attention is gradually shifting to segments that have lagged, particularly information technology, real estate and select platform-driven businesses.

The broader market, according to Rajat Sharma, Founder & CEO, Sana Securities , has been characterised by a tight trading range, even as a few pockets have delivered steady gains. In an interview to ET Now, he said this imbalance is creating conditions for a rotation into underperforming sectors, with IT standing out as a strong candidate for a turnaround.

Sharma is particularly constructive on the IT sector and has recently added exposure to it. He attributes the sector’s weak performance largely to sentiment-driven concerns linked to developments in the US, including discussions around tariffs and repeated talk of higher H-1B visa fees. While these factors do not directly impact the services business, they have created a negative narrative around Indian IT companies.

Despite this, the fundamentals remain intact. Large IT companies such as Infosys and TCS derive a significant portion of their revenues from the US, with estimates ranging from 63% to over 80% for some players. Even revenues from other geographies are largely US dollar-denominated. As a result, currency movements play a crucial role in earnings performance. Sharma points out that IT stocks are currently trading close to their historical valuation lows, and any improvement in revenue growth could translate into meaningful upside.

A strengthening dollar adds another layer of support. Historically, periods of sharp dollar appreciation have been favourable for Indian IT companies, given that most of their earnings are in US currency. With valuations depressed on one side and currency tailwinds on the other, Sharma believes the risk-reward equation is becoming increasingly attractive. In his view, once global trade and tariff-related uncertainties begin to settle, the IT sector could see a sustained recovery. He sees merit in gradually building exposure across both large-cap and select small-cap IT stocks.

Within the sector, Sharma prefers a balanced approach. Among large caps, Infosys remains one of his preferred picks. The stock is currently trading at levels where its dividend yield has crossed 2.2%, offering downside comfort. He believes the company’s strong cash position provides flexibility for acquisitions and investments as it adapts to artificial intelligence-led changes in technology spending. Even a partial re-rating to historical multiples, he notes, could result in an immediate upside of around 20% from current levels.