After months of being written off, India’s technology stocks are having a week for the history books. The Nifty IT index has surged 10.4% so far this week, putting it on course for its biggest weekly gain since October 2008, when the world was deep in the grip of the global financial crisis.
The rally, powered by stronger-than-expected second-quarter results from India’s biggest software exporters, has turned the sector into the market’s unlikely hero. While other Asian markets slid on Friday on a selloff in AI-linked stocks, Dalal Street’s tech pack went the other way, dragging the broader market up with it.
“Markets are witnessing a sharp rebound, supported by a resurgence in IT stocks following strong quarterly results,” Ankur Punj, managing director of Equirus Wealth, said on Friday.
How the numbers stack up
The scale of the move is what has caught the market by surprise. Here is where things stand as of Friday afternoon:
- The Nifty IT index is up 10.4% for the week, outpacing every other sectoral index and the benchmark Nifty 50, which is up 2.6%.
- Tech Mahindra jumped about 8% on Friday after its second-quarter revenue came in ahead of expectations, helped by robust deal wins. The stock touched Rs 1,771.40, making it the top Sensex gainer of the day.
- Wipro rose 5.8% after reporting stronger-than-expected quarterly revenue, with early signs that delayed large deals could start flowing through in the coming quarters.
- Infosys gained 3.9% to around Rs 1,159, while TCS climbed about 4.2% to Rs 2,437.
- HCLTech added around 1%, while Persistent Systems bucked the trend, falling 3.3% after brokerages flagged margin pressures from higher amortisation costs.
The Sensex itself rose over 400 points on Friday to 74,667.92, with the Nifty 50 crossing 23,100, and the IT revival was doing much of the heavy lifting.
Why money is rushing back into IT
Three forces have come together to fuel this week’s surge.
First, the earnings. Tech Mahindra, Wipro, HCLTech, TCS and Infosys have all delivered better-than-expected quarterly numbers or revenue beats this week, and management commentary has been notably upbeat. Analysts say the positive tone has led to a smart revival in the IT index, which in turn has added resilience to the Nifty.
Second, global rotation. A selloff in AI-linked stocks elsewhere in Asia prompted investors to hunt for value, and Indian software exporters, beaten down for months on fears that artificial intelligence would eat into traditional outsourcing, suddenly looked like bargains.
Third, the macro backdrop is cooperating. The rupee has shown strength, the US 10-year bond yield has eased to around 5.07%, and there are expectations of changes to long-term capital gains taxation in the coming Budget, all of which have improved sentiment toward Indian equities.
Not everyone is convinced yet
Before the party gets too loud, a note of caution. The same fears that crushed IT stocks for most of this year have not gone away. Investors are still asking whether AI will shrink the traditional outsourcing model that Indian IT majors depend on, and Friday’s gains were partly a short squeeze in heavily oversold large-cap names.
Dr. V K Vijayakumar, chief investment strategist at Geojit Investments, pointed to “value buying in large-caps” and said short-covering in the segment could accelerate the trend. But he also noted that foreign investors are likely to keep selling while bond yields stay high and crude remains above $100 a barrel.
Persistent Systems’ fall on Friday is a reminder that the sector is not moving as one block. Margin pressure, pricing discipline and deal conversion remain stock-specific risks, and brokerages will be watching the next round of results closely.
What to watch next week
The real test for this rally comes in the weeks ahead. The Q2 earnings season still has names to report from banking, telecom, automobiles and metals, and analysts say strong numbers there could provide the fundamental support the market needs.
Traders will also watch global cues, the rupee’s trajectory, and whether foreign investors, who have been net sellers, begin to return. For now, though, the beaten-down IT pack has reminded everyone why it was once the backbone of the Indian market.
Eighteen years is a long time between records. Whether this one marks the start of a genuine turnaround or just a sharp bounce in a tired market, it is the story that made this Friday one of Dalal Street’s most memorable days of the year.
FAQs
Why are IT stocks rising this week?
Better-than-expected Q2 results from Tech Mahindra, Wipro, TCS, Infosys and HCLTech, combined with global investors rotating into value plays as AI-linked stocks sold off elsewhere in Asia.
How much has the Nifty IT index gained?
The index has risen 10.4% this week, on track for its biggest weekly gain since the week ended October 31, 2008, when it climbed 11.24%.
Which IT stock gained the most on Friday?
Tech Mahindra led the pack, jumping about 8% after its second-quarter revenue beat expectations, aided by strong deal wins.
Should investors worry about AI’s impact on IT companies?
It remains the key long-term question. Markets are still weighing whether AI will disrupt traditional outsourcing, even as companies pitch AI-led deals as a growth driver.
What could sustain or stall the rally?
Upcoming Q2 results from banking, telecom and autos, the rupee’s movement, global cues, and whether foreign investors turn buyers again will decide if the rally holds.
This is a developing market story. Figures are based on Friday’s trading session and may change as the week closes.
