Nifty IT index hits record high on December 10: Here's what drove the rally

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Nifty IT index hits record high: The Nifty IT index reached new heights on Tuesday, December 10, 2024, hitting an all-time high of 45,377.75. The index rallied up to 1.21 per cent from its previous close of 44,832. 

 

IT stocks were clearly in demand, with 8 out of the 10 index constituents trading higher. Leading the charge was LTIMindtree, which surged 2.12 per cent, followed closely by Mphasis (up 2.02 per cent), Wipro (up 1.70 per cent), and Infosys (up 1.53 per cent). HCLTech also saw gains of 1.04 per cent, while LTTS, Persistent Systems, and Coforge added 0.41 per cent, 0.16 per cent, and 0.11 per cent, respectively.

 

Not all stocks joined the party as TCS dipped 0.05 per cent, while Tech Mahindra saw a steeper decline of 0.49 per cent.

 

By 11:11 AM, the Nifty IT index had come off its peak but was still trading 0.82 per cent higher at 45,199.40. In comparison, the broader Nifty50 index was up a modest 0.11 per cent at 24,646.30.

 

But what fuelled the index to an all-time high?

 

According to reports, HSBC expects the information technology (IT) industry to see a growth of 6–7 per cent in FY26, a notable improvement from the 3–4 per cent seen over the past two years. It also said that there are signs of recovery in the US markets, which is a critical revenue driver for Indian IT companies.

 

Reflecting this sentiment, HSBC issued a series of upgrades and downgrades across IT majors. Infosys was upgraded for a target price of Rs 2,120 while LTIMindtree was upgraded to ‘Buy’ for a target price of Rs 6,970. Mphasis also received a ‘Buy’ rating with a target price of Rs 3,600, while Wipro was rated ‘Hold’ with a target price of Rs 263. 

 

However, not all companies benefited from the brokerage's reassessment. TCS was downgraded to ‘Hold’ with a target price of Rs 4,540, while Tech Mahindra received a ‘Reduce’ rating with a target of Rs 1,510. Coforge was also downgraded to ‘Hold’ with a target price of Rs 8,200.

 

Despite these mixed recommendations, the Nifty IT index rose, showing resilience even as global markets struggled. Wall Street ended in the red on Monday, with the Nasdaq falling 0.62 per cent, the Dow Jones down 0.54 per cent, and the S&P 500 losing 0.61 per cent.

 

Independent analyst Ambareesh Baliga advised investors to consider booking profits at the current levels, citing the rally as an opportune moment to secure gains. 

 

He suggested that it might be wise to wait until Donald Trump assumes office for those who want to buy IT stocks, as the market could witness a decline thereafter. According to Baliga, such a dip would provide an attractive opportunity for investors to re-enter IT stocks at lower levels.

 

From a technical standpoint, Jigar S Patel, senior manager of equity research at Anand Rathi, highlighted the remarkable bullish momentum in the Nifty IT index over the past 1.5 months. During this period, the index surged nearly 5,400 points from its recent low of 39,975, translating to an impressive gain of approximately 13.5 per cent.

 

A major technical milestone in this rally, he believes, was the index's breakout above the R3 Camarilla daily resistance level, which was positioned around 44,344. This breakout not only underscores the strength of the upward momentum but also marks a critical shift in the technical landscape. The R3 level, previously a resistance point, is now expected to act as a support, providing a cushion against potential pullbacks and offering stability in the sessions ahead.

 

“Looking forward, a decisive close above the R4 Camarilla daily resistance level, located at 45,541, could act as a significant trigger for further upside, potentially propelling the NIFTY IT index towards the 47,850 mark. This scenario highlights the importance of monitoring these pivot levels closely, as they serve as key markers of strength or potential reversals in the ongoing trend,” Patel added.