IT Sector Relief: TCS & TechM Gain Over 1% as Nifty IT Index Rebounds from 20% Monthly Slump

Indian equity markets traded higher with technology stocks providing the primary lift. The Nifty 50 hovered around the 25,500 mark during the session, rising roughly 0.3%, while the BSE Sensex gained close to 0.3% to trade above 82,500 levels.

Sectorally, the Nifty IT index recovered after witnessing one of its sharpest monthly declines in recent years. Technology stocks contributed significantly to the day’s upside, with most frontline counters trading in the green.

Heavyweights See Buying Interest

Among large-cap IT names:

• Infosys rose over 0.53% intraday, with trading volumes higher than recent averages. Despite today’s gains, the stock remains nearly 25–30% below its 52-week high.
• Tata Consultancy Services (TCS) posted moderate gains of 1.27%, tracking the broader sector move.
• HCL Technologies saw buying interest, climbing 1.23% as it mirrored the strength in TCS.
• Tech Mahindra emerged as a sector leader with a gain of 1.14%, recovering from earlier weekly lows.
• Wipro, however, remained an underperformer, slipping 0.33% into the red after a positive start.

Despite Thursday’s bounce, February has been particularly volatile for technology counters.

The Nifty IT index has fallen roughly 20% this month, making it one of the worst-performing sectoral indices on the NSE. The decline marks its steepest monthly fall in over two decades.

Several frontline IT stocks have corrected between 15% and 30% from their recent highs. The selloff has erased significant market capitalisation across the sector and weighed on institutional portfolios, including domestic mutual funds and insurance players.

What Triggered the Correction?

1. AI Disruption Concerns

Investor sentiment has been cautious amid fears that rapid advancements in generative AI could compress margins for traditional IT services firms. Automation-led efficiency gains by global clients have raised concerns about slower deal sizes in legacy outsourcing contracts.

2. Global Demand Moderation

Revenue visibility from key markets such as the US and Europe remains closely tied to corporate technology spending. Any signs of slowdown in discretionary IT budgets have amplified volatility in Indian tech stocks.

3. FII Positioning

Foreign institutional investors have trimmed exposure to export-driven sectors in recent weeks, adding to pressure on IT counters.

Why the Rally Today?

The "Nvidia Effect" and the AI Narrative Shift

The primary driver for today’s sentiment shift was the blockbuster earnings report from Nvidia, which posted record revenues of $68.1 billion. This global "AI halo" has shifted the conversation for Indian IT firms from one of disruption to one of implementation.

Analysts suggest that Indian service providers are increasingly viewed as the essential "delivery layer" for global AI integration. This sentiment was further bolstered by the India-Sweden AI and Digital Technology Corridor agreement, signaling India's solidified role in the global tech supply chain.

Institutional Support

A critical factor in today's stability is the sudden synchronicity between foreign and domestic investors.

• FII Rebound: After weeks of offloading tech stocks, Foreign Institutional Investors turned net buyers, injecting approximately ₹2,991 crore into the market.
• DII Absorption: Domestic Institutional Investors continued their support with a massive ₹5,118 crore inflow, effectively absorbing the selling pressure seen in laggards like Wipro.

Valuation Reset and Outlook

The recent correction has led to a valuation reset across the sector. Price-to-earnings multiples for several frontline IT firms have moderated from premium levels seen last year.

However, sustained recovery will depend on:

• Improvement in deal wins and order pipelines
• Clarity on AI monetisation strategies
• Stability in global macroeconomic indicators

For now, the sector’s bounce offers near-term relief but does not yet signal a structural trend reversal.

Also read: The Result That Boosted Wall Street: Inside Nvidia’s 20% Revenue Surge