Nifty IT index soars 3%; LTM, Coforge, TCS, TechM gain up to 5%; here's why

IT stocks rallied on Friday after Nvidia's strong revenue forecast reinforced optimism around the artificial intelligence (AI) boom.

Information technology (IT) share price movement

 

Information technology (IT) shares rallied up to 5 per cent on the National Stock Exchange (NSE) in Friday’s intra-day deals. The buying interest in IT stocks was attributed to a strong close in the US markets last night following Nvidia's strong revenue forecast. 

 

LTM rallied 5 per cent, while Tata Consultancy Services (TCS), HCL Technologies and Coforge surged 4 per cent each. Infosys, Persistent Systems, Tech Mahindra (TechM) and Oracle Financial Services were up 3 per cent each.

 

At 10:26 AM on Friday, the Nifty IT index was the largest gainer among sectoral indices, up 3.2 per cent, as compared to 0.31 per cent rise in the Nifty 50.

 

 

What’s driving IT stocks?

 

The US markets closed firmly higher, with the Dow Jones Industrial Average gaining 0.20 per cent, the S&P 500 rising 0.72 per cent and the Nasdaq advancing 1.57 per cent on Thursday, after the US semiconductor giant reversed its post-results decline and rallied on an upbeat sales forecast, lifting the broader technology complex, said Hariselvan Radhakrishnan, Founder & CEO of HST Wealth, a SEBI-registered Research Analyst firm.

 

Meanwhile, the Nifty IT index outperformed the market by soaring 15 per cent over the past two months, supported by reasonable valuations, attractive yields and a possible rotation of capital from concentrated AI portfolios into beaten-down IT-services stocks. 

 

However, AI-led revenue deflation, the erosion of labour-arbitrage advantages and rising pricing pressure in managed-services deals are likely to weigh on growth in the near to medium term, analysts at Systematix Institutional Equities said in the IT sector report.

 

“Following the recent rally, sector risk–reward appears more balanced, with broad-based multiple expansion constrained by high Fed rates, crowded-out IT budgets and intense competition. We prefer Tech Mahindra among large caps and Coforge (NOT RATED) among mid-caps, supported by market-share gains, capability building and healthy deal wins,” the brokerage firm said. 

 

Overall, Indian IT companies' Q1 earnings performance was mixed. A few companies continued to execute exceptionally well, while large-cap IT was still dealing with a higher base slower growth problem due to AI-led pricing deflation and slower discretionary spending. Analysts at ICICI Securities said they remain selective on the sector, preferring growth-oriented companies while waiting for the broader AI impact on demand and pricing to play out.

 

Indian IT valuations have rebounded post Q1FY27, with the Nifty IT Index up 22 per cent from its July 2026 lows, although still negative on year-to-date basis. The recovery reflects improving sentiment, healthy deal pipelines and better H2FY27 demand commentary; however, risk-reward has now moved to a more balanced zone, making further upside momentum increasingly dependent on execution and earnings delivery, said analysts at Choice Institutional Equities. 

“Within Tier I, we favour TCS and TechM for stronger margin resilience and deal conversion, while Coforge and Persistent Systems remain our preferred companies in the mid-cap, given superior growth visibility, sustained deal momentum and consistent execution. We expect the sector’s re-rating to become increasingly stock-specific and execution-led, rather than broad-based,” the brokerage firm said.    Disclaimer: Views and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers' discretion is advised.