Nifty IT Hits Eight-Week High After Four-Day Surge: Will The Rally Sustain?

The Nifty IT index surged 3.92 per cent on Friday, October 16, hitting an eight-week high and extending its winning streak to four consecutive sessions. The Nifty IT index has gained more than 12.50 per cent over the past four sessions, supported by buying in heavyweight IT stocks following their September quarter results.

Tech Mahindra and Wipro led Friday’s gains, rising 8.48 per cent and 5.95 per cent, respectively. Tata Consultancy Services (TCS) advanced 4.89 per cent, while Infosys and HCL Technologies gained 4.61 per cent and 1.47 per cent. Among midcap stocks, Mphasis, LTM, Coforge and Oracle Financial Services Software closed higher. Persistent Systems was the sole laggard, falling around 1.70 per cent.

The rally comes after quarterly results from major IT companies, as investors assess profit growth, AI business opportunities, new deals and demand for technology services.

Over the four sessions, Tech Mahindra surged 21.68 per cent, TCS gained 16 per cent, Wipro rose 13.97 per cent, Infosys advanced 13.84 per cent, and HCLTech climbed 12.84 per cent.

What’s Triggering Rally In Nifty IT

The September quarter results presented a mixed picture, but strong profit growth at TCS, HCLTech and Tech Mahindra helped improve sentiment. AI-led business opportunities also remained a key focus, as companies reported growing demand for AI implementation, software modernisation and automation.

TCS reported an 11.2 per cent year-on-year (YoY) increase in revenue to Rs 73,188 crore and a 15 per cent rise in net profit to Rs 13,884 crore. Its annualised AI revenue run rate crossed $3.1 billion, while quarterly deal bookings stood at $9.6 billion. However, constant-currency revenue grew just 0.5 per cent sequentially.

HCLTech reported 11.52 per cent YoY revenue growth to Rs 35,620 crore, while net profit rose 21.2 per cent to Rs 5,132 crore. Its advanced AI revenue increased 78 per cent in constant-currency terms to $219 million. The company also secured a $1.14 billion AI deal with Mercedes-Benz and raised the lower end of its FY27 revenue growth guidance.

Tech Mahindra reported a 32.7 per cent jump in net profit to Rs 1,586 crore, alongside 15.6 per cent revenue growth to Rs 16,180 crore. Wipro, however, reported a 1.4 per cent decline in net profit to Rs 3,200.6 crore. Its large deal bookings fell 58.6 per cent sequentially to $700 million, highlighting persistent pressure on discretionary technology spending.

What Do Analysts Say

Analysts remain cautious about the outlook for large IT companies, as demand has yet to show a clear recovery. While AI growth could support stocks, a stronger earnings recovery will depend on clients spending more on technology services.

Harsh Gupta Madhusudan, chief India strategist at Ionic Asset, says it is too early to conclude that the earnings slowdown has ended.

"Too early to conclude that the earnings slowdown for large-cap listed Indian IT is behind us, but given the deflation of the AI trade getting more legs, multiples could get more support as we have seen over the last week as well."

Sumit Pokharna, senior vice president of fundamental research at Kotak Neo, said demand was largely unchanged as clients continued to be cautious about discretionary spending. He highlighted growing enterprise investments in AI-native solutions, core modernisation, autonomous global business services and data infrastructure.

"The demand environment has not materially changed since the last quarter. Discretionary programs without near-term value remain under scrutiny. AI revenue grew faster in BFSI relative to other verticals."

According to Pokharna, better AI capabilities are opening up opportunities in cybersecurity, AI governance and software engineering. However, the outlook for a broader recovery will depend on demand conditions and the extent to which AI-related investments translate into sustained revenue growth.