Nifty IT index up 1% in trade as rupee hits 90-mark against US dollar

IT stocks rising today on record low Rupee

 

Shares of large-cap information technology (IT) companies were trading firm on Wednesday, gaining up to 2 per cent on the National Stock Exchange (NSE), despite an otherwise weak market.

 

Shares of Tata Consultancy Services (TCS) (₹3,189.40) and Wipro (₹255.55) advanced 2 per cent each in the intraday trade, while Mphasis, Tech Mahindra, LTIMindtree, and Infosys shares gained up to 1 per cent.

 

At 10:47 AM, Nifty IT index was the sole gainer among sectoral indices and was up 0.57 per cent, as compared to 0.45 per cent decline in the Nifty 50.

 

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In the past one month, the Nifty IT index has outperformed the market by surging 6 per cent as against 0.6 per cent rise in the Nifty 50. However, despite this, the index has tanked 13 per cent thus far in calendar year 2025, as compared to a 10-per cent rally in the benchmark index.  CATCH STOCK MARKET UPDATES TODAY LIVE

Why are IT stocks rising today?

 

Investors rushed to buy shares of IT companies on Wednesday as the domestic currency hit a record low today. Tech companies are, typically, at an advantage when the Indian Rupee depreciates against the Dollar as they earn a significant portion of their revenue in dollars while most expenses are in rupees.

 

Notably, the Indian rupee slid to a record low on Wednesday, crossing the 90-mark against the US dollar for the first time. It touched a lifetime low of 90.28 per Dollar in the intraday trade.

 

On Tuesday, the rupee had already touched 89.9475 before ending the day at 89.87 --  a decline of nearly 0.4 per cent, according to Reuters. Traders said any support from a weaker US dollar is unlikely to offer much relief for now.  ALSO READ | Here's why Angel One share price declined 6% in trade on December 3

IT sector reports steady Q2 earnings

 

Meanwhile, in the July to September quarter (Q2FY26), 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 a IT Services sector report.

 

Despite a plethora of AI-related commentary, the brokerage firm believes that the initial phase of enterprise adoption will lead to revenue headwinds for the industry. It forecasts 2-3 per cent impact on the industry revenue growth over H2FY26-H2FY29. The impact magnitude, it said, can change depending on evolution of GenAI technology and clients' willingness for scaled adoption.

 

Analysts expect a peak of the impact in FY2027 and a gradual reduction over FY2028 and beyond. They expect the impact to be largely borne by incumbents.  ALSO READ | Nifty India Defence index down 2%; what's dragging defence stocks today? 

For Motilal Oswal Financial Services, while the inflection point in Gen-AI services spending may still be a few quarters away, it believes that the past 1-year and 3-year periods of underperformance offer attractive valuations to start increasing portfolio weight in Indian IT names selectively and gradually.

 

Indian IT services' share in Nifty profits has been stable at 15 per cent for the past four years, whereas its weight in the benchmark index is now at a decadal low of 10 per cent (from 19 per cent in December 2021). Accordingly, the brokerage firm said they are now raising IT Services from an 'Underweight' position to a mildly 'Overweight' by bringing Infosys into its model portfolio.

 

Analysts believe that Infosys will be a key beneficiary of the enterprise-wide AI spends as its Topaz suite of AI services coupled with capabilities in full-stack app services will be back in preference.

   

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