Coforge soars 7%, Nifty IT index jumps 3%; what's driving the rally?

Thus far in the month of July, the Nifty IT index rallied 15 per cent, as compared to 0.6 per cent rise in the Nifty 50.

Information technology (IT) shares price movement

 

Shares of information technology (IT) companies continued their upward movement, with the Nifty IT index surging 3 per cent to 30,258.90 on the National Stock Exchange (NSE) in Tuesday’s intra-day deals after Coforge reported strong June 2026 quarter (Q1FY27) earnings.

 

The index was trading higher for the third straight trading day, soaring 6 per cent during the period. Thus far in the month of July, IT index rallied 15 per cent, as compared to 0.62 per cent rise in the Nifty 50.

 

At 09:24 AM, the Nifty IT index was up 2.7 per cent at 30,235.85, as compared to 0.08 per cent rise in the Nifty 50. IT index has bounced back 18 per cent from its 52-week low of 25,699.10 touched on July 1, 2026.

 

Today, Coforge surged 7 per cent, while Mphasis soared 5 per cent on the NSE in intra-day deals. Tata Consultancy Services (TCS), Persistent Systems, Tech Mahindra, LTM and Infosys rallied 3 per cent each. 

 

Thus far in the month of July, the stock price of Persistent Systems, HCL Technologies and LTM surged between 23 per cent and 26 per cent, while TCS and Tech Mahindra soared 17 per cent and 16 per cent, respectively.

 

What’s driving Coforge 7% rally?

 

Coforge delivered a strong Q1FY27, with organic growth excluding exited businesses of 5.2 per cent quarter-on-quarter (QoQ) constant currency (CC) materially ahead of its broadly flat guidance, alongside healthy growth across key verticals. 

 

Deal momentum remained robust with $691 million order intake and the 12-month executable order book reaching a record $2.23 billion, up 44 per cent year-on-year (YoY), providing strong revenue growth visibility, ICICI Securities said in a note.

 

Notably, Encora’s integration has increased acquisition-related amortization and leverage, with Coforge raising $550 million debt at 4.6 per cent interest to fund the transaction. Principal repayments shall begin from Q3FY27 and continue through Q1FY30, which, along with higher interest costs, could weigh on below-EBIT profitability and cash flows, the brokerage firm said.

 

Nevertheless, consolidated earnings before interest tax (EBIT) margin of 16 per cent was already ahead of the 15.5 per cent FY27 guidance and organic margin remained strong at 16.7 per cent, providing comfort on operational execution and debt servicing. The brokerage firm believes, with Encora now operationally integrated, a strong large-deal pipeline, healthy cash conversion and increasing AI-led opportunities, Coforge remains well positioned to sustain industry-leading growth through FY27.

 

“Coforge reported higher than expected growth in US$ sales in Q1FY27; however, EBIT margin were marginally lower than our expectations. Order intake came strong QoQ besides reported large deal win worth >$230 million (5 years tenure) for new business announced on July 24, 2026 implying growth prospects remaining healthy ahead. Also reported Free Cash Flow (FCF) seems robust. Await clarity regarding any one off in Sales and margins,” Equirus Securities said in Coforge’s Q1FY27 quick take.

 

Meanwhile, as per media reports, Gartner expects global IT spending to grow 14.2 per cent YoY to $6.37 trillion in 2026, up from $5.58 trillion in 2025, with growth increasingly concentrated in AI-related infrastructure. Data centre systems spending is projected to surge 62.5 per cent to $822 billion, making it the fastest-growing segment, driven by AI workloads and demand for high-performance computing. 

 

Software spending is expected to grow 15.5 per cent to $1.47 trillion, while IaaS spending is forecast to rise 29.3 per cent to $287 billion. In contrast, IT services spending is expected to grow a relatively modest 5.3 per cent to $1.57 trillion, highlighting that the current spending acceleration remains skewed toward AI infrastructure and software rather than traditional services, ICICI Securities said in a note.  ================================================  Disclaimer: View and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers discretion is advised.