Nifty IT index up 3%; Infosys, Tech Mahindra, LTM, Persistent gain 4%

In the past four trading days, IT index outperformed the market by soaring 9 per cent, as against a 2 per cent gain in the Nifty 50.

Nifty IT index movement

 

Shares of information technology (IT) companies extended their up move, with the Nifty IT index surging 3 per cent to 28,100 levels on the National Stock Exchange (NSE) in Tuesday’s intra-day trade. The rally was driven by renewed buying in large-cap IT stocks, making the index the best-performing sector on the NSE.

 

At 01:29 PM, the Nifty IT index was the top gainer among sectoral indices, up 2.5 per cent, as compared to 0.04 per cent rise in the Nifty 50. In the past four trading days, IT index outperformed the market by soaring 9 per cent, as against 2 per cent gain in the benchmark index.

 

 

Infosys, Tech Mahindra, Persistent Systems and LTM rallied 4 per cent each in intra-day deals. Tata Consultancy Services (TCS), HCL Technologies, Mphasis and Coforge were up in the range of 2 per cent to 3 per cent.

 

However, despite the past 4-day rally in the Nifty IT index, thus far in the calendar year 2026, the index underperformed the market by falling 26 per cent. In comparison, Nifty 50 was down 6 per cent.

 

Why are IT shares in focus?

 

According to Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments there are distinct signs of an uptrend in the market. Two factors which were weighing on Indian markets - the crude price hike and sustained foreign portfolio investors (FPI) selling - are now behind us and have reversed. Crude is back to the pre-war level and FPIs have turned net buyers, said the analyst. 

The FPI buying is not yet a strong trend, but the fact that they have stopped selling and turned buyers is a significant shift, which is likely to sustain supported by fundamentals, said Dr. VK Vijayakumar.

 

Meanwhile, global cues were constructive overnight, with Wall Street scaling fresh record highs. The Dow Jones Industrial Average closed above the 53,000 mark for the first time at 53,056, while the S&P 500 gained 0.72 per cent and the Nasdaq climbed 1.12 per cent, led by renewed strength in semiconductor stocks.

 

Over the past month, Indian equities (+3.7 per cent) have begun to outperform global markets, and especially Emerging Markets (-6 per cent). Whereas, India also outperformed the AI euphoria-related markets (Korea -8.1 per cent, Taiwan +0.7 per cent, Hong Kong -8.9 per cent, Nasdaq Composite -3.8 per cent), noted analysts at ICICI Secures.  While the overall FPI selling persisted over the past month (USD ~3 bn), closer examination indicated that the weakness in Indian IT Services stocks had a role to play – going by the fact that for most days where FPI selling was observed, the IT index was negative, said analyst at ICICI Securities.

 

“We had earlier argued that India’s phase of underperformance could be ending, which remains premised on a combination of favourable valuations, improving nominal growth, fall in oil prices to pre-West Asia crisis levels, improved external sector in terms of current account deficit (CAD) despite the challenges, USD/INR reversal to 95 levels, and the fatigue showing up in the AI infrastructure stock euphoria. While recent concerns on a strong EL Nino impacting monsoons remain, there are signs of improving precipitation across the country,” the brokerage firm said. 

 

Axis Securities view on IT sector

 

According to analysts at Axis Securities, the recent commentary from Accenture indicated a moderate outlook for the coming quarters amid an uneven macro environment and an increasing shift toward outcome-based engagement models. In the April to June 2026 quarter (Q1FY27), employee hiring witnessed a steady growth, primarily led by Global Capability Centers (GCCs), Artificial Intelligence (AI) adoption, and demand for mid- and senior-level professionals.  Despite the relatively slower pace of hiring, companies continue to invest in technology, with a stronger focus on cloud modernisation, AI integration, and cybersecurity, said analysts. 

Overall demand remains mixed, as spending on routine services such as application maintenance, testing, and support remains subdued, while investments in digital transformation initiatives and specialised technology solutions continue to stay robust. Notably, several large- and mid-cap IT companies have already begun investing in end-to-end AI capabilities across business verticals to strengthen their enterprise offerings.

 

Although the brokerage firm anticipates that the near-term recovery, particularly for large IT players, will remain delayed as AI adoption and delivery models are still at a nascent stage, mid-cap IT companies are expected to continue outperforming due to their agility, niche positioning, superior execution capabilities, and operational efficiencies.  Despite attractive valuations, future growth will depend on an improvement in demand, increased adoption of outcome-based engagement models, and sustained momentum in AI-led deal wins. 

 

Going forward, key factors to monitor include demand recovery, discretionary spending trends, deal conversions and ramp-ups, AI monetisation, client budgets, and currency movements to assess the pace of earnings recovery, the brokerage firm said.  ==============================================  Disclaimer: View and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers discretion is advised.