Domestic technology stocks witnessed strong buying momentum on June 1, with all 10 constituents of the Nifty IT index ending in the green. According to reports from LiveMint, the Nifty IT index finished the session with a solid gain of 2.66% at 29,854, reversing previous losses and demonstrating significant sector recovery. Persistent Systems led the gains with a 4% increase, followed by Tech Mahindra, Infosys, Larsen & Toubro, Coforge, and Oracle Financial Services, all rallying more than 2.5%. However, this positive performance came amid broader market weakness, with the S&P BSE Sensex dropping 508.40 points or 0.68% to 74,267.34 and the Nifty 50 falling 165.15 points or 0.70% to 23,382.60. The Nifty settled below the 23,400 mark as escalating tensions between the US and Iran, surge in crude oil prices, and continued FII selling weighed on overall market sentiment.
The strong performance was primarily driven by stronger-than-expected first-quarter earnings from major US software companies, as reported by LiveMint. Salesforce reported revenue of $11.1 billion for the quarter ended April 30, rising 13% and supported by $444 million in sales linked to its November acquisition of Informatica. The company's adjusted profit stood at $3.88 per share, significantly ahead of analysts' average estimate of $3.13 per share. Snowflake reported a 34% rise in product revenue to $1.33 billion, surpassing analysts' average estimate of $1.27 billion, with remaining performance obligations at $9.21 billion. The rally in IT shares comes after a sharp selloff earlier this year triggered by advances in artificial intelligence, including Al startup Anthropic's Claude Cowork agent, which can automate tasks across legal, sales, marketing and data analysis functions.
Wipro announced an extension of its partnership with ServiceNow to deploy agentic AI workflows across key enterprise functions including information technology, human resources, procurement, and cybersecurity, as reported by LiveMint. Additionally, Mphasis Limited gained traction after its analyst day, where the company outlined its transition from a traditional services-led model to a platform-plus-outcome-based approach from FY27. Other major IT stocks including Mphasis, Tata Consultancy Services, Wipro, and HCL Technologies also ended higher with gains ranging between 1% and 1.7%. The sector's resilience was particularly notable given the broader market's decline, with IT shares bucking the trend on buying interest while FMCG stocks led the overall market decline.
Morgan Stanley believes Indian equities have reached a bottom and are positioned for significant gains in the year ahead, citing an expected acceleration in earnings growth alongside improving valuations and sentiment. According to Investing.com, the investment bank noted that Indian earnings appear to be entering a new upcycle, with the firm expecting the earnings growth acceleration to continue for several quarters beyond immediate challenges. Morgan Stanley anticipates investment as a percentage of GDP will rise to 37.5% over the next five years, driven by capital spending across energy, defense, semiconductors, fertilizers and data centers. The policy environment remains supportive with an undervalued currency, modest real interest rates and fiscal stability, while India's share of global profits now exceeds its global index weight by the largest margin on record, excluding 2009.
