The Nifty IT index soared 4.64% on Thursday, staging a dramatic recovery after four consecutive sessions of losses that had dragged the index to a 52-week low. The rally came despite weak global technology market cues, with US semiconductor stocks tumbling 6.3% overnight amid concerns over elevated valuations and heavy AI-related capital expenditure. At market opening around 09:20 AM, the Nifty IT index gained 3.10%, significantly outperforming the broader market, while the Nifty 50 advanced 0.41%. The rally was driven by renewed buying in large-cap technology stocks, making the IT index the best-performing sector on the NSE. Infosys emerged as the top gainer, jumping 5.82%, followed by Tech Mahindra (4.57%), HCLTech (4.56%) and TCS (4.45%). Wipro also advanced 2.27%, with the broad-based buying reflecting renewed investor confidence in the sector after a sharp correction over the past few sessions. Other technology-focused indices, including Nifty India Digital and MidSmall IT & Telecom, also posted gains of over 2%, indicating a broader rotation back into technology sectors that had borne the brunt of recent corrections.
Benchmark equity indices staged a strong rebound on Thursday, with the BSE Sensex surging 579.48 points, or 0.75%, to settle at 77,502.12, while the NSE Nifty 50 gained 169.85 points, or 0.71%, to close at 24,175.70. With Thursday's advance, benchmark indices have now logged gains for two consecutive sessions. Market participants attributed the rally primarily to bargain buying and short covering after the recent selloff, rather than any fresh company-specific developments or earnings upgrades. The positive sentiment was further aided by declining global crude oil prices, with Brent crude slipping below the $70-a-barrel mark following progress in indirect US-Iran talks. Lower oil prices are generally viewed as positive for India, as they help ease imported inflation and reduce the country's import bill. The rupee weakened 24 paise to end provisionally at 95.40 against the US dollar, adding to the overall market dynamics.
Technical analysts believe the Nifty continues to maintain a positive structure after Thursday's strong performance. According to Jatin Gedia, VP, Technical Research, Teji Mandi Investment Technologies Pvt Ltd., investors should nevertheless remain cautious near an important resistance level. "Nifty continued the positive momentum from the previous trading session, closing with gains of 170 points at 24175. The anchored VWAP from the all time high is placed at 24368 (July fut). Therefore, caution is warranted because the index failed to surpass this level and sold off on the previous couple of occasions in April and May." He believes that a decisive breakout above this resistance could trigger another leg of the rally, with potential targets at 24605 (April Month Swing High). The Nifty has generated a bullish crossover between the 20-day and 50-day EMAs, strengthening the medium-term outlook with key support around 23,900-23,800 levels.
The sector had been under pressure amid concerns over slowing discretionary technology spending by global clients, persistent macroeconomic uncertainty affecting enterprise technology budgets, and the long-term impact of artificial intelligence on traditional IT services business models. However, renewed buying suggests investors are looking beyond near-term headwinds and positioning for a potential recovery. While concerns around earnings growth and valuations persist, market commentary indicates that demand for artificial intelligence implementation projects remains healthy over the medium term. Investors will closely monitor upcoming quarterly earnings and management commentary for signs of improving demand, as sustained earnings growth will be crucial in supporting current valuations.
Buying interest extended beyond frontline indices, with broader markets also ending higher on Thursday. However, financial stocks delivered a mixed performance, with Bajaj Finserv gaining 3.42%, while private lenders Axis Bank and Kotak Mahindra Bank closed in the red. On the flip side, losses remained limited across the market, with Max Healthcare Institute, down 1.05%, emerging as the biggest Nifty loser, highlighting the broad-based nature of Thursday's rally. The recovery in IT stocks came despite a series of cautious brokerage reports in recent days, with several global brokerages having trimmed target prices and flagged subdued demand ahead of the first-quarter earnings season, suggesting Thursday's rally was driven more by technical factors than a meaningful improvement in the sector's earnings outlook.
