Nifty IT index hits over 4-month high; rallies 9% in one month

In the past one month, TCS, Infosys, Tech Mahindra, HCL Technologies, LTIMindtree, Persistent Systems and L&T Technology Services have rallied between 9 per cent and 15 per cent.

Don't want to miss the best from Business Standard?

Information technology (IT) shares today

 

Shares of information technology (IT) continued trading higher for the second straight day, with the Nifty IT index surging 2 per cent on the National Stock Exchange (NSE) in Thursday’s intra-day trade on expectations of earnings improvement going forward. The index now trades at the highest point in more than four months.

  The IT index was trading higher for the second straight day, as the Indian rupee hit a record low of 90.43 against the US dollar in early trade on Thursday.

 

At 11:51 AM; Nifty IT index, the top gainer among sectoral indices, was up 1.5 per cent, as compared to 0.15 per cent rise in the Nifty 50. The IT index hit an intra-day high of 38,471.60, its highest level since July 10, 2025. 

 

In the past one month, IT index rallied 9 per cent, as against 0.16 per cent gain in the benchmark index. However, thus far in the calendar year 2025 (CY25), the index underperformed the market by falling 11 per cent. In comparison, the Nifty 50 has rallied 10 per cent during the period.

 

Among individual stocks, Tata Consultancy Services (TCS), Coforge, Mphasis, Persistent Systems, LTIMindtree, HCL Technologies and Tech Mahindra were up 2 per cent to 3 per cent on the NSE in intra-day trade.

 

In the past one month, TCS, Infosys, Tech Mahindra, HCL Technologies, LTIMindtree, Persistent Systems and L&T Technology Services have surged between 9 per cent and 15 per cent.  CATCH STOCK MARKET LIVE UPDATES TODAY

Why are IT stocks outperforming the market?

 

Tech companies are, typically, at an advantage when the Indian Rupee depreciates against the US Dollar as they earn a significant portion of their revenue in dollars while most expenses are in Rupees.

 

In the July to September quarter (Q2FY26), the IT sector's earnings before interest and tax (Ebit) margins surprised positively, partly due to INR depreciation of 3 per cent in the quarter. Most companies beat margin estimates by 30-90 bps. However, the underlying pressure points exist.

 

"Companies have managed to protect margins during weak demand phases through efficiency measures, wage deferrals, and cost controls. The levers appear largely exhausted after nearly three years of subdued demand. Large cost take-out deals are inherently margin-dilutive, and a recovery in discretionary spending or further INR depreciation is essential to offset this headwind," analysts at Kotak Institutional Equities said in an IT Services sector report.

 

Meanwhile, year-end trends for IT services in CY25 had an uptick in deal wins for the broader sector and improved performance / commentary for the verticals of financial services, hi-tech. According to BofA Securities, these provide the base for a modest growth acceleration in CY26, alongside help from lowered interest rates and less impact from trade uncertainties in comparison to CY25. 

 

Accordingly, analysts at the foreign brokerage firm expect revenue growth rate for large companies to see an uptick from 0-2 per cent in CY25 to 3-5 per cent in CY26. Manufacturing and Retail verticals continue to be impacted on account of tariff uncertainties and stabilization here is essential to push up overall growth beyond the 5 per cent mark. 

 

On the AI front, competitive dynamics had resulted in IT services companies pushing for embedding AI-led productivity at a faster pace than anticipated and was part of the equation leading to soft growth in the year. On a go forward basis, the impact of this on growth rates is expected to flatten or lessen. Technology transformation using AI has been a top priority for enterprises, but initiatives have often stalled given the quality of data. Demand for such programs should now increase as the challenges are being gradually overcome, BofA Securities said.