The Nifty IT index jumped 4.2% to close at 31,116.6, recording its biggest single-day gain in a year and extending the sector's three-day rally to 7.6%. According to The Economic Times, this marks the biggest single-day advance in over a year as optimism around AI adoption and software spending boosted sentiment. The rally helped benchmark indices snap their four-day losing streak, with Sensex rising 383 points (0.5%) to close at 74,650 and Nifty 50 gaining 101 points (0.4%) to end at 23,484. The market capitalisation of BSE-listed companies increased by nearly ₹2 trillion to ₹462.68 trillion, highlighting the broad-based nature of the recovery.
TCS emerged as the top performer, adding 6.7%, while Infosys rose 5.68%, HCL Technologies jumped 4.05%, and L&T Mindtree gained 4-6% each. Infosys contributed the most to the Sensex's gains, followed by TCS, as reported by Business Standard. In the mid-cap segment, Persistent Systems jumped nearly 5% to top the Nifty Midcap 100 gainers list, while Mphasis gained 3.5%, Coforge rose 3.4%, and KPIT Technologies advanced over 2%. Four IT companies featured among the top five gainers on the Nifty Midcap 100 index, indicating strong performance across market capitalizations. The Nifty IT index is down 17.9% so far this year, compared to the benchmark Nifty 50's 10.1% decline, though the recent momentum suggests potential recovery in the sector.
The Nifty IT index has formed a bullish hammer pattern on the monthly chart, signalling a trend reversal, according to The Economic Times. Within the sector, recent moves suggest a mix of short covering in stocks such as TCS and HCL Tech, along with fresh long build-up in Infosys and Coforge over the past three sessions. Analysts expect the IT benchmark's up move to extend towards 32,000-32,100, near its April highs. Kunal Bajaj from Choice Institutional Equities noted that "Indian IT stocks continue to extend gains, supported by improving global software sentiment and growing evidence that enterprise AI adoption is expanding technology spending opportunities rather than disrupting incumbent service providers." Other factors like rupee depreciation, strong orderbook and improving outlook for discretionary tech spending, are supporting the current rally in IT stocks.
The positive momentum was supported by strong earnings from US-based cloud software firm Snowflake, which lifted optimism around global software spending. According to CNBC TV18, Dell Technologies surged nearly 40% after reporting strong demand for AI infrastructure, with revenue linked to data centre equipment and AI servers jumping 181% year-on-year. The company projected full-year revenue growth of 47% year-on-year based on the midpoint of its $165-169 billion guidance range and forecast FY27 AI-linked shipments of $60 billion. Cloud data company Snowflake surged 36.5%, marking its biggest single-day gain in five years, after raising its full-year product revenue growth guidance to 31% from 27%. TCS announced a partnership with French AI firm Mistral to provide frontier grade AI solution, Mistral Forge, for enterprises globally, as reported by Business Standard.
Vinod Nair, head of research at Geojit Investments, noted that "markets recovered from initial losses, led by gains in the IT sector, while continued accumulation in large-cap stocks reflected comfort with valuations, as the Nifty 50 trades closer to its long-term averages than the relatively richer valuations in broader markets." According to Business Standard, with the earnings season largely behind, investor attention is expected to shift to macroeconomic triggers, including the progress of the monsoon and the outcome of the RBI's monetary policy meeting. Rahul Singh, CIO - Equities, Tata Asset Management, highlighted that "while a weaker rupee provides some support to IT services and valuations in BFSI appear reasonable, we remain mindful of risks such as higher commodity prices and their potential impact on margins in certain growth-oriented sectors." Choice Institutional Equities' Kunal Bajaj expects tier-2 IT firms to gain market share during tech transitions due to their agility, recommending Coforge, Persistent Systems and Happiest Minds among tier-2 companies, and Infosys and Tech Mahindra among tier-one companies.
