Infosys, TCS, Coforge: Nifty IT pack jumps 2.5%. What's behind the gains?

IT stocks: The Indian technology stocks witnessed a sharp rally, pushing the Nifty IT pack over 2.5 per cent higher to emerge as the best-performing sector on the National Stock Exchange (NSE) on Monday, July 27. 

 

Nifty IT index hit the day's high of 29,537.50, rising 2.67 per cent over its last close, and extending month-to-date gains to 12 per cent. If the index holds gains, it could be its best monthly performance in two years.

 

All 10 sectoral constituents traded in the green, with Oracle Financial Services Software (OFSS) emerging as the best performer following a 4 per cent increase. Infosys followed suit as it gained 3.5 per cent. Coforge, LTM, TCS and HCL Technologies were other major winners from the IT pack after over 2 per cent rise each. 

 

 

What drove IT stocks today?

The sharp gains in IT stocks today follow easing valuations, a decent Q1 show, and an improving outlook after a sharp selloff this year. Nifty IT has lost 22 per cent so far in 2026, emerging as the worst sectoral performer on Dalal Street.

 

Today's rally also coincided with Jefferies' upgrade for the Indian IT sector to 'neutral' from 'underweight'. According to media reports, the global brokerage said that the valuations have improved after the sharp crash in major IT names, while reverse AI trade will likely aid the IT services players. 

 

Earnings in line

On the earnings front, JM Financial said that Indian IT services companies' operational performance has remained decent on soft expectations, the BFSI vertical continues to exhibit relative strength across most companies, and concerns around order book softness highlighted during Accenture’s recent commentary have not materially played out in the reported results of Indian IT companies thus far.   Also Read | Which IT stock is worth your portfolio?

 

However, it cautioned that commentary across companies does not indicate any meaningful improvement in the underlying demand environment. 

 

Valuations improve

Ajit Mishra of Religare Broking said that the only missing piece is that discretionary spending has not seen a meaningful recovery yet. That said, he noted that the sector has already undergone a substantial correction in recent months, so the downside appears limited.

 

He said that valations have already taken a hit, and what we're seeing now could be "selective buying" by investors.

 

Reverse AI trade

Mishra further added that at the same time, the profit-taking we're seeing in AI-related stocks globally is offering some relief to traditional IT businesses. "It suggests that the conventional way of doing business will continue alongside AI adoption, and will not be a complete shift in the operating model."

 

So far in July, Nasdaq index is down 7 per cent as investors rotate out of AI stocks amid worries around valuations. READ MORE

 

IT pack outlook

Analysts will track the IT pack this week as it remains an earnings-heavy week for Big Tech and the US Federal Reserve's rate outcome is also slated to be out on Wednesday night. 

 

"The Wednesday Fed outcome and the tone of US Big Tech guidance will decide whether IT sector's rally extends or exhausts," said Harshal Dasani, business head, INVasset PMS. He highlighted that markets are leaning toward an earlier easing path after better US growth data, and short positioning in a sector that had fallen to multi-year lows getting covered ahead of both events.  Meanwhile, JM Financial also advised caution on the sector. "While companies have largely delivered in-line to better-than-expected Q1FY27 performance, the fundamental demand narrative is largely unchanged – macro uncertainty and AI-led productivity gains continue. Given this backdrop, we remain selective and continue to prefer companies with stronger earnings visibility," it said in a note last week.

 

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