IT stocks rallied sharply on Tuesday, with the Nifty IT index surging 5.2%, marking its biggest single-day gain in 17 months. All 10 constituents of the Nifty IT index ended higher, with HCL Technologies leading the gains at 8.42%, followed by Tata Consultancy Services at 6.8%, Coforge at 4.46% and Infosys at 4.13%. The rally helped the Nifty 50 advance 1.6% to 22,721.95, while the Sensex rose 1.54% to close at 73,033.78, making them Asia's best performers with 46 Nifty 50 stocks advancing. The Nifty IT index also broke above the 27,614-28,755 range in which it had traded between September 24 and October 12, according to SBI Securities. A stronger dollar provided additional support to Indian IT exporters, which earn a substantial share of their revenues in foreign currencies. The Nifty IT Index is still down over 21% so far against the 13% decline in the Nifty, highlighting the sector's challenging year despite recent gains. In the latest developments, the Nifty IT index has soared more than 2,000 points over just two sessions to cross 30,000 on Wednesday, marking the first time in nearly a month, as reported by The Economic Times. The rally came as concerns over AI-driven disruption eased, triggering an 'anti-AI' trade, with investors viewing Indian IT stocks as beneficiaries of the global AI frenzy fizzling out.
HCLTech's July-September quarter results provided a significant boost to sentiment, with the company reporting a consolidated net profit of ₹5,132 crore for the September quarter, up 21.2% year-on-year, beating analyst expectations. Revenue surged by 11.5% YoY and 3% QoQ to ₹35,620 crore, while in constant currency, revenue growth stood at 2.3% QoQ and 2.6% YoY. Sequentially, revenue grew 3% while net profit rose 11%, with revenue in constant-currency terms increasing 2.3% quarter-on-quarter and 2.6% YoY. Advanced AI revenue came in 28.4% QoQ and 78% YoY in constant currency to $219 million, highlighting growing demand for AI-related services. Operating margin expanded to 18.2%, demonstrating improved operational efficiency. New deal wins stood at $3,258 million for the quarter, including a $1.14 billion mega AI deal from Mercedes-Benz. According to Jefferies, HCL Technologies' September-quarter growth was led by advanced AI revenues, which rose 28% sequentially to account for 6% of overall revenue. The brokerage upgraded HCL Technologies to 'hold' from 'underperform' and raised its FY27-29 earnings-per-share estimates by up to 2%, citing higher margins. The company added 6,450 employees in Q2, its highest quarterly addition in 16 quarters, with headcount reaching an all-time high of 2.30 lakh at the end of September. HCLTech also raised its FY27 revenue growth guidance to 2.5-4% in constant currency terms, backed by healthy deal bookings and accelerating revenue from advanced AI.
TCS shares climbed 6% following the company's robust quarterly performance. TCS reported 4% quarter-on-quarter profit growth in Q2, with net profit rising to ₹13,884 crore versus ₹13,349 crore in the previous quarter. Revenue increased 1.3% sequentially to ₹73,188 crore from ₹72,275 crore, while EBIT grew 1.4% to ₹17,553 crore. EBIT margin remained stable at 24% versus 24.38% in the previous quarter. In constant currency terms, revenue grew marginally by 0.5% and services revenue increased by 3.4%. The strong results reflect the company's continued ability to deliver consistent growth despite challenging market conditions. TCS also continued to expand its workforce, adding nearly 16,000 employees during the quarter, with headcount rising for a third consecutive quarter, marking the first such streak since the third quarter of FY23. TCS shares gained around 11% in a week, supported by stronger-than-expected results, institutional buying and growing AI revenue. The stock rebounded over 18% from a 52-week low near ₹1,976 in July 2026 to around ₹2,335 currently, drawing buying interest after its steep decline from previous highs above ₹4,600. The recovery also reflects a changing market narrative around AI, with investors initially fearing automation would reduce demand for conventional IT services, but growing enterprise demand for integrating AI into complex business systems has raised expectations that technology service providers could benefit from the next phase of adoption.
The latest Q2 earnings season has demonstrated resilient demand trends and strong AI revenue momentum across major IT companies. TCS's consolidated net profits surged around 15% to ₹13,884 crore in the September quarter, with revenue from core operations advancing 11.2% year-on-year. TCS's total contract value (TCV) surged to $9.6 billion as of the quarter ended September 2026. Similar to Infosys, TCS's management said that the company's AI revenues remained strong at $3.1 billion in the September quarter, crossing 10% of the overall revenue due to the overall momentum and demand in the industry. Infosys CEO Salil Parekh shared that AI services accounted for over 8% of its revenue in the second quarter and is growing at a double-digit rate sequentially. Parekh also shared that he estimates the AI revenues will drive almost half of its work in the next two to three years. Despite the AI revenue momentum, Parekh was concerned about the long-term risks in the AI boom, citing the high cost of chips, uncertainty over how long data-centre capacity will remain relevant, and the possibility of new AI models significantly lowering inference costs. Looking at HCL Tech, the company's earnings were in line with and slightly ahead of market estimates, adding support to the sentiment of investors amid AI concerns in the global market.
The rebound in IT stocks near 52-week low levels after falling over 30% from the record highs brings it under the spotlight amid the lacklustre atmosphere in the broader market. IT stocks gain the most this week, surging as much as 5.5% this week till date as investors turned optimistic on IT stocks after taking cues from the quarterly earnings report for the Q2FY27. The benchmark NIFTY IT surged over 5.2% on Tuesday posting one of the best performance in more than a year. TCS shares have bounced back more than 15% in ten trading sessions, trading above its 20 and 50 EMA and indicating towards a positive crossover, though the long-term structure continues to remain sideways until it crosses its 200 EMA mark of ₹2,459 apiece. Infosys shares jumped over 10% in the 10 trading sessions, posting a double bottom candlestick pattern near ₹979 level and crossing their 20 and 50 EMA with RSI of 58 indicating strong bullish strength. HCL Technologies shares have shown relative outperformance, sustaining gains from July lows and crossing its long-term moving average of 200 EMA on Wednesday. Tech Mahindra shares bounced over 9% in three trading sessions, posting sector leading rally and crossing short-term and long-term averages of 20, 50 and 200 EMA levels. Wipro shares have surged over 7% and trade above short-term moving averages of 20 and 50 EMA, showing signs of revival momentum. Collectively, the NIFTY IT index is also showing signs of bottoming out after the recent rally, with the index briefly trading below the long-term moving averages since February 2026 and failing to cross it in the previous two attempts in August and September. The index briefly trades below the long-term moving averages since February 2026 and failed to cross it in the previous two attempts in August and September, with the upward sloping trendline support remaining at 28,800 and 31,000 as crucial resistance levels.
