Nifty IT index up 12% in July; HCL Tech, TechM gain 20% from 52-week lows

However, despite recovery from lows, the Nifty IT index underperformed the market by falling 22 per cent, as against a 7.2 per cent decline in the Nifty 50 thus far in CY2026.

Information technology (IT) shares today

 

Shares of information technology (IT) companies extended their rally, with the Nifty IT index gaining 2.3 per cent on the National Stock Exchange (NSE) in Friday’s intra-day deals. Thus far in the month of July, IT index rallied 12 per cent, as compared to 2 per cent rise in the Nifty 50.

 

At 11:52 AM, the Nifty IT index was up 1.3 per cent, as compared to 0.83 per cent rise in the Nifty 50. IT index hit a 52-week low of 25,699.10 touched on July 1, 2026.

  On Friday, Tata Consultancy Services (TCS), HCL Technologies, Tech Mahindra, LTM and Infosys rallied 3 per cent each. These stocks have recovered by 14 per cent to 20 per cent, from their respective 52-week lows touched on July 1, 2026.

 

 

On Thursday, the Nasdaq Composite dropped 387.28 points or 1.47 per cent to 25,881.95 as semiconductor stocks plunged amid AI-related jitters.

 

However, despite recovery from lows, thus far in the calendar year 2026, Nifty IT index underperformed the market by falling 22 per cent, as against 7.2 per cent decline in the Nifty 50.

 

Tech Mahindra gains 3% on strong Q1 results

 

Share price of Tech Mahindra gained 3 per cent after the company posted strong revenue growth, up 2.6 per cent quarter-on-quarter (QoQ) and 6.6 per cent year-on-year (YoY) in constant currency (CC) terms. The IT firm also reported healthy margin expansion in Q1 and guided for industry-leading growth for FY27 backed by a strong total contract value (TCV) of $1,078 million and growth momentum across most verticals, according to analysts at ICICI Securities.

 

The management highlighted a healthy demand in BFSI (payments modernization, wealth platforms and AI transformation), Manufacturing (AI-led engineering and data platforms), Healthcare (vendor consolidation and AI-led discretionary spending) and Retail (digital transformation), while Technology & Media continues to face spending volatility and the macro environment remains mixed. It also reiterated confidence in delivering above peer-average revenue growth and a 15 per cent earnings before interest and tax (EBIT) margin in FY27, supported by the ramp-up of recent large deals, improving client mining and sustained benefits from Project Fortius (margin improvement).

 

However, the management also cautioned that margins could face near-term headwinds from wage hikes planned in a phased manner from Q2, investments in AI capabilities and go-to-market initiatives which are expected to be largely offset by operational efficiencies and productivity improvements. Increasing traction in AI-led transformation through Project Helix, enterprise AI adoption moving from pilots to production along with strong deal momentum and operational discipline, should support profitable growth over the coming quarters despite macro uncertainties in select verticals, the brokerage firm said.

 

Tech Mahindra continues to execute well both in growth and margins – it will be the growth leader among the large tier in FY27 (expect 5.7 per cent CC YoY revenue growth in FY27).  Analysts at JM Financial Institutional Securities raised the target multiple to 19x (versus 18x earlier) given a healthy order book and better-than-expected Q1 delivery. The brokerage firm revised FY28-29E estimates by 4-6 per cent. It maintains an 'Add' rating on the stock given valuations are at 18x FY28 consensus EPS, at around 13 per cent premium to the sector and revised target price of ₹1,670 (versus ₹1,525 earlier).

 

Equirus Securities view on IT sector

 

According to Equirus Securities, the Nasscom US CEO Forum stated that India's technology services sector will remain a key driver of global enterprise transformation in the AI era, with AI expanding—rather than replacing—the role of IT services. 

 

India's AI services market is already generating an estimated $10–12 billion in revenue, with nearly 25 per cent of enterprises moving AI initiatives from pilot projects to production. The industry expects significant opportunities in enterprise modernization, data engineering, AI governance, and intelligent operations, supported by India's large AI-skilled workforce and deep enterprise expertise.

 

As per ISG, the technology services industry continues to ride high, driven largely by AI-fuelled demand for hyperscaler services. The nature of the demand is changing, as traditional labour-intensive work is increasingly displaced by LLMs. Providers are facing more competition and changing economics, including pricing deflation and more provider-funded, AI-powered transformation embedded within contracts. Accelerating AI adoption is driving robust enterprise demand for cloud services. Enterprise confidence in AI remains high, but the focus is shifting to value creation, the brokerage firm said in IT/ITeS/technology sector trends.  ====================================================  Disclaimer: View and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers discretion is advised.