IT Sector Outperforms Broader Market as Stocks Rally for a Second Straight Session

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Coforge and TCS Lead the Surge as Sector-Wide Buying Strengthens Why IT Stocks Are Rising: Three Key Drivers Behind the Upswing Investors Look for Direction Amid Sector Rotation and Global Cues

Despite a volatile trading session across Indian equities, IT stocks continued to chart their own path, extending gains for the second consecutive day on Thursday. While the Sensex and Nifty swung sharply in both directions, investor confidence in technology stocks remained intact, signaling renewed interest in the sector after months of subdued performance.

The Nifty IT index climbed nearly 1.5 percent in afternoon trade, building on its over 1 percent rise on Wednesday. In just two sessions, the index has gained more than 2 percent, marking one of its strongest short-term recoveries this month.

Notably, all 10 constituents of the Nifty IT index traded in the green, underscoring broad-based strength across large-cap and mid-cap IT counters.

Coforge and TCS Lead the Surge as Sector-Wide Buying Strengthens

Leading the rally, Coforge surged over 3.19 percent, emerging as the top performer on the index by early afternoon. Persistent Systems followed with gains of nearly 2 percent, reflecting improved market appetite for mid-tier IT companies.

Among the large caps, TCS shares rose 1.58 percent to ₹3,230.40, touching their highest level in almost three months. The rally in TCS received an extra boost after reports suggested that OpenAI is in advanced discussions with the company to set up a major AI compute presence in India and co-develop enterprise-focused agentic AI solutions.

Other heavyweights including Mphasis, Tech Mahindra, HCL Technologies, Wipro, and Infosys also moved higher, rising up to 2 percent as investors rotated back into defensives amid market uncertainty.

Also Read : Rupee Bounces Back From Intraday Weakness, Closes at 89.92 Against the Dollar

Why IT Stocks Are Rising: Three Key Drivers Behind the Upswing

1. Weakening Rupee Continues to Support IT Exporters

A significant contributor to the sector’s rally is the persistent weakness in the Indian rupee, which dropped 28 paise to a new all-time low of 90.43 against the US dollar earlier in the session. The domestic currency’s slide—driven by sustained foreign fund outflows and strong dollar demand—provided a natural tailwind to IT companies, which derive the bulk of their revenue in dollars.

For IT services exporters, a weaker rupee directly boosts rupee-denominated earnings and improves operating margins, making the sector an attractive hedge during times of currency volatility. Thursday’s depreciation once again highlighted the industry’s structural advantage during periods of macroeconomic stress.

2. Hopes of a US Federal Reserve Rate Cut Lift Tech Spending Outlook

Fresh economic data from the US revived optimism that the Federal Reserve may implement a rate cut next week, a sentiment that quickly filtered through to global equity markets. Lower rates in the world’s largest economy typically support corporate investment, including technology and digital transformation budgets.

With the US accounting for a major share of revenue for Indian IT service providers, any expectation of improved client spending strengthens visibility for future deal flows, particularly in cloud modernization, data engineering, cybersecurity, and AI-driven solutions.

If the Fed signals a dovish stance, analysts believe Indian IT firms could see improved deal momentum after a subdued period of discretionary spending cuts.

3. Positive Brokerage Commentary Points to Sector Inflection Point

Brokerage sentiment has also played a key role in fueling the latest uptrend. Motilal Oswal recently highlighted that the IT services sector may be approaching an inflection point, with growth expected to strengthen over the next 6–9 months.

The brokerage anticipates:

A gradual recovery in H2 FY27
Stronger enterprise adoption through FY28
Shifts from pilot AI projects to large-scale deployments
Margin stability driven by operational efficiencies

Motilal Oswal noted that sector valuations remain at decade lows, despite stable profitability across top-tier IT companies. This suggests meaningful upside potential as demand conditions improve.

Last week, the firm upgraded Infosys, Mphasis, and Zensar to Buy, citing their ability to capture emerging AI-led opportunities. Wipro was revised to Neutral from Sell, indicating signs of stabilizing performance.

Even after Thursday’s rally, the Nifty IT index remains down 12.7 percent year-to-date, highlighting headroom for a broader re-rating if macro indicators turn supportive.

Investors Look for Direction Amid Sector Rotation and Global Cues

The IT sector’s ability to outperform during a volatile market session signals a tactical shift by investors toward defensive, export-driven themes. With currency movements, global monetary expectations, and AI-driven transformation shaping sentiment, IT stocks could remain in focus in the coming weeks.

While near-term volatility in markets will persist, the combination of a weak rupee, positive global cues, and constructive brokerage commentary has positioned the Indian IT sector for a potential medium-term recovery.