Nifty IT index has climbed nearly 9% in three sessions, supported by strong quarterly earnings, attractive valuations and a shift of funds away from overheated global AI stocks. Analysts said this is more of a relief rally than a structural turnaround.
HCLTech reported 21.2% profit growth with 18.2% EBIT margin while TCS posted 15% profit growth and annualised AI revenue of 3.1 billion dollars. These results met expectations and avoided negative surprises. Tech Mahindra also added to the gains. Large cap IT firms are trading at 12–18 times price to earnings multiples with dividend yields of 3–5%, making them attractive after a prolonged correction.
Global investors booked profits in AI linked firms due to rising debt and bond yields and concerns over stretched valuations. Heavy investment spending by chipmakers such as Samsung and SK Hynix added to caution. This rotation helped Indian IT stocks as a safer option.
Nifty IT rose 8.89% since Tuesday with a 2.6% gain on Thursday. Eight of ten constituents traded higher. On Tuesday the index recorded its strongest single day rise in 17 months at 5.2%.
Brokerages said the rally is driven by stable earnings and valuation comfort but sustained upside depends on US tech spending and deal conversions. A close above 32000 resistance could trigger a bullish breakout.