What's fueling the rally in IT stocks today? Analyst explains

The Nifty IT index snapped a four-session losing streak on Friday, rising 2 per cent in trade and emerging as one of the top performing sectoral indices of the day. The rally was broad-based, with nine of the 10 index constituents trading in the green.

 

As of 1:25 PM, the Nifty IT index was up 548 points, or 2 per cent, to  trade at 27,908. Individually, Tech Mahindra, and Infosys were the top gainers, up 3 per cent each at ₹1,350, and ₹1,108, respectively. TCS (₹2,284), Coforge (₹1,293), OFSS (₹9,027), LTM (₹3,978), and HCL Tech (₹1,136) were up in the range of 1 to 3 per cent.

 

 

The Nifty IT index has underperformed the markets in 2026 so far and emerged as top sectoral loser as well. As per data, the index has corrected 26 per cent on Y-T-D basis. In comparison, the Nifty 50 index has declined 9 per cent in the same period.

 

From its 52-week high of 40,301.40, the Nifty IT index is down 31 per cent.

 

According to ACE Equity data, only one stock in the Nifty IT index has remained in positive territory in 2026, while the other nine constituents have declined up to 35 per cent. The sole gainer has been Oracle Financial Services Software (OFSS), which has delivered a 16 per cent return so far this year. On the other hand, LTM has emerged as the top laggard, sinking 35 per cent, followed by Infosys (down 32 per cent), and HCLTech (down 31 per cent). Meanwhile, Tata Consultancy Services (TCS), the country’s largest IT services exporter, has declined 30 per cent. 

 

Data showed that the nine IT companies of IT index (Wipro, Infosys, TCS, HCL Tech, Tech Mahindra, Coforge, LTM, Mphasis, and Persistent Systems) have together lost ₹9 trillion thus far in 2026.

 

Aamar Deo Singh, senior vice president, equity, Angel One, said that today's rally is primarily a bargain buying rather than any major fundamental change. Also, the Nasdaq Composite hit a record high last night, which has boosted to sentiment. Shares of chip designer Cerebras Systems gained sharply in the debut session on Nasdaq. At the same time, rupee weakness is helping IT companies from an earnings perspective because these are export-oriented businesses.

 

He said that the IT index and IT stocks have corrected significantly, mainly due to AI concerns. "Materially, not much has changed after today's 2 per cent rally. It is more of a rebound after sharp corrections. Many stocks are trading near 52-week lows and have corrected 30–40 per cent." 

 

Singh said that AI is definitely a cause of concern in terms of how IT companies will adapt, leverage it, and what kind of business they will continue to have going forward.

 

"That said, the IT sector remains under pressure because of AI disruption fears, and that is a genuine concern," he said.  On when the IT sector could show signs of recovery, Singh said, “Recovery is possible, but it will largely depend on quarterly earnings. This quarter and the next one will be very important."