Nifty IT index rallies 2%; Infosys, HCL Tech, TCS gain up to 3%; here's why

Since September 30, the Nifty IT index has outperformed the market by surging 6.4 pee cent as compared to a 4-per cent rise in the Nifty 50 index

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IT stocks rising today: Shares of information technology (IT) companies were trading higher on Monday, gaining up to 3 per cent on the National Stock Exchange (NSE) in the intraday trade, on value buying.

 

Infosys, HCL Technologies, Tata Consultancy Services (TCS), Mphasis, LTIMindtree, Wipro, and Oracle Financial Services Software share prices rose in the range of 2 per cent to 3 per cent.

 

At 11:11 AM, the Nifty IT index, the top gainer among sectoral indices, was up 2 per cent as compared to a 0.50-per cent rise in the Nifty 50. Since September 30, the IT index has outperformed the market by surging 6.4 per cent as against a 4 per cent gain in the benchmark index.

 

However, thus far in calendar year 2025, the Nifty IT index has slipped 17 per cent, as compared to an 8.4 per cent rally in the Nifty 50. 

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Why has the Nifty IT index been rising since October 2025?

 

According to analysts at Kotak Institutional Equities, the July to September 2025 quarter (Q2FY26) results of IT companies indicated that demand trends are stabilising, with fewer program cancellations and easing headwinds across select sectors.

 

The brokerage firm believes the deal momentum remains steady, and skewed towards cost optimisation. AI adoption is accelerating, with vendors announcing clear strategies - mid-tier players stand out for better incentive alignment to capture this wave. Analysts at the brokerage have increased earnings estimates by 0-3 per cent, aided by currency-driven margin resilience. "The setup for FY27 holds promise," it added.

 

In Q2FY26, earnings before interest and tax (Ebit) margins surprised positively, partly due to rupee depreciation of 3 per cent in the quarter. Most companies beat the brokerage's 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, the brokerage firm said in IT Services Q2FY26 review report.

 

Tier-1 and mid-tier IT, both, trade at 1-year forward price earnings (P/E) multiple approaching the last 10-year and last 5-year averages, respectively. Valuations for Tier-1 IT companies have declined to a level where FCF and dividend yield are starting to get attractive. Mid-tier companies, meanwhile, continue to trade at premium valuations with growth potential, justifying the same for some such as Coforge and Hexaware, analysts said.

 

After three years of muted growth, frustration is evident in multiple derating. The prevailing belief that IT firms are 'AI losers', overlooks the bigger culprits: macro uncertainty and client captive shifts. Recovery in discretionary spending is, therefore, pivotal to dispel fears of structural decline, the Kotak report said.

 

Going ahead, analysts see a rebound in spending, driving 200-300 bps industry growth acceleration. This, they said, would reaffirm the strength of the model and unlock meaningful stock upside. "Conversely, another weak year in FY2027 could cement the perception, however inaccurate, that IT Services face structural headwinds," the brokerage firm said.

 

Meanwhile, among individual stocks, Infosys rallied 3 per cent to ₹1,519.60 in the intraday trade today. The IT major, on Thursday, November 6, 2025, announced that it has fixed Friday, November 14, 2025, as the record date for its ₹18,000-crore share buyback announced in September.

 

Infosys delivered a steady performance driven by resilience in deal execution, continued traction in digital transformation projects and operational discipline across key verticals. Its focus on GenAI adoption, platform monetisation and cloud-led modernisation is expected to enhance scalability and differentiation, according to analysts at Geojit Investments.

 

Strategic acquisitions in cybersecurity and consulting strengthen domain capabilities and regional presence, while internal efficiency initiatives and talent upskilling support margin resilience. With improving demand visibility, strong innovation pipelines and disciplined capability allocation, it remains well positioned for sustainable growth in the evolving digital landscape, the brokerage firm said. Analysts reiterate our BUY rating on the stock, based on 22x FY27E adjusted EPS, with a revised target price of ₹1,712.