Indian IT stocks surge up to 3.3% as strong quarterly results ease AI fears

The Nifty IT index surged as much as 3.3% to 33,138.6 on Friday, October 23, driven by a strong sector recovery following encouraging September-quarter earnings. Benchmark indices remained largely unchanged, rising just 0.05% each. The IT index has staged a sharp comeback after months of pressure, gaining 17% in October alone following an 11% decline in September. It is up 15% over the past month, 14% in three months, and 8% in six months, while remaining down 10% over the past year. However, it has recovered about 29% from its July low of 25,699.10.

Market Movers

Tata Consultancy Services (TCS) led Friday's gains by rising around 3%, while Infosys, HCL Technologies, and Wipro advanced approximately 2% each. Among mid-cap stocks, Coforge, Persistent Systems, and Mphasis gained nearly 1% apiece. On the other hand, Tech Mahindra, L&T Technology Services, and Mastek bucked the trend and traded in the red. The rally follows a global software selloff earlier this year driven by fears of artificial intelligence disruption, slowing revenue growth, and geopolitical uncertainty.

Analyst Views

Better-than-expected September-quarter performances have helped restore confidence. Tech Mahindra reported revenue above expectations on strong deal wins, while Wipro delivered stronger revenue supported by delayed large deals. HCLTech benefited from AI-related revenue and healthy deal wins, and TCS reported healthy quarterly results. Deven Choksey Research favors Persistent Systems, Tech Mahindra, and Tata Elxsi, while maintaining a cautious stance on Wipro and Infosys. Meanwhile, Jefferies raised target prices across large-cap IT companies by 14% to 18%, though it maintained an 'Underperform' rating on TCS and a 'Hold' rating on Infosys.

Context

Information technology services represent a major pillar of India's corporate export economy, with large firms earning a significant share of their revenue from clients in the United States and Europe. Sector performance is closely tied to global macroeconomic conditions, enterprise technology budgets, and how fast emerging tools like artificial intelligence alter traditional software delivery models.