Tech stocks continued their rally for the third consecutive session on May 18, with the NIFTY IT index rising 2.4% to reach a day's high of 28,358. According to reports from Live Mint, Coforge led the gains with a 4.4% surge, while Tech Mahindra advanced 4.1%. Other major gainers included Persistent Systems, Oracle Financial Services Software, Mphasis, and Infosys, with gains ranging between 1% and 4.1%. All 10 constituents of the NIFTY IT index were trading in the green, following a 1.3% gain in Friday's session. The broader market recovery was significant, with the Sensex ending 77.05 points or 0.1% higher at 75,315.04 and the Nifty closing nearly flat with gains of 6.45 points or 0.03% at 23,649.95. As per Outlook Business, the recovery came after benchmark indices had fallen as much as 1.3% amid weak global cues and concerns surrounding the prolonged US-Iran conflict. Sensex rose a whopping 1,100 points from day's low as value buying emerged at lower levels, with the index having cumulatively fallen 3.5% in the last six sessions.
India's top IT companies distributed a record ₹1.01 lakh crore dividend in FY26, highlighting strong shareholder payouts despite a sharp decline in technology stocks. As reported by thebean.media, NIFTY IT index companies including TCS, Infosys, HCLTech, Wipro, Tech Mahindra, LTIMindtree, Persistent Systems and Mphasis increased or maintained dividends even as sector valuations fell. TCS remained the largest contributor but reduced its payout by 12.7%, while Coforge also cut dividends sharply. Wipro stood out with an 84% jump in payouts and announced a ₹15,000 crore buyback, reinforcing its capital return strategy. Despite these generous dividends, IT stocks suffered steep corrections amid AI disruption concerns, cautious client spending and weaker earnings outlook, with the Nifty IT index dropping 26.6% over the year and significantly underperforming the broader NIFTY 50 benchmark.
Analysts attribute the continued rally to currency weakness and the sector's transition into a defensive hedge. As reported by Live Mint, Hariprasad K, SEBI-registered research analyst and founder of Livelong Wealth, explained that IT stocks are slowly transitioning from being viewed purely as a cyclical growth sector to a relative defensive hedge due to rupee depreciation benefits and resilient export earnings visibility. However, structural concerns surrounding AI disruption and slower discretionary global tech spending continue to cap aggressive upside in the sector. The Indian rupee weakened sharply and closed at a fresh record low of 96.35 against the US dollar, remaining under pressure due to elevated crude oil prices, sustained foreign fund outflows and geopolitical uncertainty linked to West Asia. Since major Indian IT companies derive a significant portion of revenue from overseas markets, especially in dollar terms, a stronger US currency tends to improve earnings visibility for exporters. During the latest session, Infosys added 2.4% at ₹1,145.6 and TCS rose 1.1% to ₹2,289.9, while Tech Mahindra was up 4.8% and Wipro rose 1.3%, with the weakening rupee translating into more revenues for these dollar-earning tech giants.
Despite the recent rally, tech stocks have remained under pressure throughout 2026 due to AI-related concerns. According to Live Mint, the sell-off began in February following the rollout of Anthropic's Claude Code and concerns that rapid advances in generative AI could disrupt demand for traditional IT and professional services. The weakness extended further after OpenAI announced plans to launch a new company backed by more than $4 billion, aimed at embedding engineers within organisations to identify areas where AI can deliver the greatest impact. However, the latest recovery suggests that investors are adopting a staggered allocation strategy instead of waiting for complete clarity on macro risks, with value buying emerging in IT and select sectors despite broader market volatility. Market participants viewed large-cap IT companies as relatively insulated from immediate commodity-linked disruptions compared with cyclical sectors, with the move into IT also coming as investors sought stability ahead of key earnings from major US technology companies later this week, particularly Nvidia, which remains central to the global artificial intelligence rally.
Indian IT companies have delivered mixed earnings performance with concerning growth outlook for FY27. As reported by Live Mint, HCL Technologies has forecast revenue growth of 1–4% in constant currency terms for FY27, lower than its initial guidance range of 2–5% in the previous financial year. Infosys expects revenue growth to moderate, guiding for 1.5%–3.5% growth in constant currency terms, down from its previous projection of 3%–3.5% in FY26. Meanwhile, Wipro projected IT services revenue in the range of $2,597 million to $2,651 million for Q1FY27, implying sequential growth of -2% to 0% in constant currency terms. Despite the recent gains, India's IT stocks have declined 25.3% so far this year, making them the country's worst-performing sector compared with a 9.7% decline in the benchmark NIFTY 50.
