Indian IT sector stocks experienced a significant recovery on Thursday, with several major players recording gains of up to 4% after a period of market weakness. This rebound signals renewed investor interest in the technology services segment.
Top IT Companies See Strong Gains
Among the standout performers, Infosys Ltd., India's second-largest IT services exporter by sales, saw its shares jump 4.28% to Rs 1,027.65. Close behind, HCL Technologies Ltd., the third-largest software exporter, advanced 3.01% to Rs 1,066. Other notable gainers included Tata Technologies Ltd. and Coforge Ltd., both adding 3% to their share values.
Further reinforcing the sector's positive momentum, LTM Ltd. climbed 2.94% to Rs 3,650. Companies like Mphasis, Persistent Systems Ltd., and Tata Elxsi also recorded strong increases, ranging from 2.5% to 4%. Additionally, Tata Consultancy Services Ltd. (TCS), L&T Technology Services (LTTS), Tech Mahindra Ltd. (TechM), Oracle Financial Services Software Ltd. (OFSS), and KPIT Technologies Ltd. (KPIT Tech) all saw their shares rise by up to 3%.
Interestingly, Wipro also managed to add 0.97% to reach Rs 171.70, even as its American Depository Receipts (ADRs) experienced a 17% decline in overnight US trading.
Analysts Weigh In on Sector Outlook
Market analysts are closely watching the IT sector. A recent note from MOFSL highlighted that while IT stock valuations have corrected meaningfully, a sustained re-rating would require clear evidence of improving IT demand and stabilizing revenue growth. MOFSL also emphasized the need for companies to demonstrate that AI-led opportunities are effectively offsetting productivity-related headwinds.
Looking ahead, MOFSL projects potential adjustments to financial guidance from some major players. With the first half of the fiscal year tracking below the necessary run-rate for the upper end of FY27 guidance, MOFSL anticipates that companies might revise down their top-end guidance bands. Specifically, Infosys could lower its upper-end FY27 guidance by 50 basis points, while HCL Tech might trim its services growth guidance by 100 basis points.
SAMCO Securities provided a historical perspective, noting that the second half of the calendar year has consistently been the strongest period for the Nifty IT Index over the past three decades. Average quarterly returns show a significant jump from 3.4% in Q1 and 0.6% in Q2 to 10.2% in Q3 and 11.3% in Q4.
While cautioning that seasonality alone should not drive investment decisions, SAMCO Securities suggested that when attractive valuations, extreme pessimism, and favorable historical seasonality align, the odds tend to shift in investors' favor.