Nifty IT Jumps Over 5%: Why HCLTech, TCS, Infosys Shares Are Up Today

Indian IT stocks bounced back on September 15, with the Nifty IT index rising as much as 5.23 per cent in morning trade.

HCL Technologies led the gains, rising more than 6 per cent. LTM and Tata Consultancy Services (TCS) were up between 5 per cent and 6 per cent, while Tech Mahindra, Mphasis and Infosys gained 4-5 per cent. Persistent Systems, Wipro and Oracle Financial Services Software also traded higher, with gains ranging from 1.50 per cent to 3 per cent.

Coforge was the only major IT stock in the red, falling more than 1 per cent. The stock has been under pressure since independent director and Nomination and Remuneration Committee chairperson DK Singh resigned on September 11, days after chairman OP Bhatt stepped down. The developments had also weighed on the broader IT sector last week.

Why Are IT Stocks Rising Today?

The sharp rebound in IT stocks on September 15 comes as investors reassess the threat artificial intelligence (AI) poses to traditional software and IT services companies.

Indian IT stocks have been under pressure in recent weeks on concerns that rapid advances in AI could reduce demand for some services provided by companies such as TCS, Infosys and HCLTech. The Nifty IT index had fallen around 8 per cent since the beginning of September before today's recovery.

The latest developments around the pace of AI development have given investors a reason to rethink some of these concerns.

Anthropic CEO Dario Amodei has called for a slower pace of development of advanced AI models, while OpenAI CEO Sam Altman has backed the proposal. The comments have also raised questions about the pace of spending on AI infrastructure, semiconductors and computing capacity.

That has hurt some US chip stocks, but the impact on Indian IT companies is being viewed differently.

If the development and adoption of increasingly advanced AI systems takes longer than expected, traditional IT services companies could get more time to adapt their businesses and build AI capabilities. It could also ease some of the near-term concerns around AI replacing existing software and technology services.

The shift in expectations has helped improve sentiment towards Indian IT stocks after their sharp decline in the first half of September.