IT Sector Battles Geopolitical Storms, AI Emerges as Growth Driver

• India's IT sector faces significant pressure from geopolitical tensions, including President Trump's tariff threats and potential H-1B visa restrictions.
• Nifty IT index plummeted, reflecting investor concerns over subdued growth prospects and a challenging demand environment with cautious client spending.
• Q3 earnings season anticipates modest constant-currency growth due to seasonal factors and ongoing macroeconomic uncertainty.
• HSBC downgraded its outlook, stating IT is 'no longer a long-term double-digit compounding sector', predicting greater cyclicality.
• AI services offer a glimmer of hope, with major firms acquiring capabilities and partnerships forming, signaling acceleration post-2026.

Why It Matters: Indian IT faces short-term headwinds from geopolitics and demand, but AI is poised to drive future growth.