Indian IT Giants Rally as AI Fears Subside and Global Tech Sell‑off Shifts Funds

India's top IT services stocks jumped up to 8% on Friday as worries that AI would upend traditional tech services eased and investors shifted away from a global tech sell‑off. Four of the five largest Indian IT firms – Tata Consultancy Services, HCL Technologies, Wipro and Tech Mahindra – all rose, with HCLTech posting the biggest gain of about 8%. The rally came after the Kospi index fell 14% this week, prompting a broader rotation out of tech stocks worldwide. Nasdaq‑100 has slipped 3% since Monday, and finance minister Nirmala Sitharaman signalled openness to exempt foreign portfolio investors from capital‑gains tax, a move analysts say could further boost beaten‑down IT shares. The Nifty IT index surged roughly 12% this week, while the MSCI World Information Technology Index dropped 4.5%. Wipro and Tech Mahindra posted 6% and 7% gains respectively a day after reporting September‑quarter results; TCS and HCLTech added nearly 3% and 8% after their earnings. Revenue growth was modest: TCS revenue rose 0.2% to $7.64 bn, HCLTech and Tech Mahindra each grew about 2% to $3.72 bn and $1.69 bn, while Wipro fell 0.1% to $2.61 bn. Wipro kept its guidance of up to 0.5% constant‑currency revenue growth for the December quarter; HCLTech held its full‑year 4% constant‑currency growth target. Analysts note that expectations for IT were low, but the compression in legacy services was milder than feared and inorganic expansions offered some relief. Valuations have fallen since the launch of ChatGPT; on September 30 the PE ratios were 13.9 for TCS, 18.8 for HCLTech and 13 for Wipro, down sharply from December 2022 levels. Both TCS and HCLTech are moving into data‑centre and AI‑related businesses, adding to the positive sentiment.

Context

The Indian IT sector traditionally earns most of its revenue from overseas clients, so shifts in global tech sentiment and policy on foreign investment can quickly affect stock prices. It is also adjusting to AI hype by expanding into data‑centre services and AI partnerships, which helps cushion the impact of slower AI‑related spending.