Indian IT services companies earn most of their revenue in US dollars, so what happens in Washington can move their shares more than what happens in Mumbai. When the market fears higher US interest rates, tech valuations tend to fall. When those fears ease, the sector often rebounds quickly. That is the backdrop for Wednesday’s sharp move in the Nifty IT index, which came right before the quarterly results season.
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Why Did IT Stocks Rally?
At around 10:45 am, the Nifty IT was up 2.2 percent at 28,279.80, while the Nifty 50 was down 11 points at 22,705. The index had dropped more than 5 percent over the previous eight sessions. The rally came as the odds of another US Fed rate hike fell to 44 percent from nearly 70 percent, after US consumer confidence hit a 12-year low and a New York Fed official said there was no need for urgency.
A stronger dollar helped too. The Bloomberg Dollar Spot Index jumped 1.9 percent in September, its best month since June, and a stronger dollar means IT firms earn more rupees for the same dollar revenue. The buying also looks like a relief rally after a heavy sell-off, with investors stepping in just ahead of earnings.
Which Stocks Led the Move?
TCS: TCS shares rose 3.2 percent to Rs 2,097.80, making the stock the top Nifty gainer. As India’s largest IT company, it is usually the first to report, and it opens the Q2 season on 8 October. That makes the stock the sector’s first real test of whether this bounce is justified.
Tech Mahindra: Tech Mahindra gained 2.6 percent to Rs 1,549.50, taking the second spot on the Nifty gainers’ list. The stock has a good story to lean on. Kotak expects it to grow 1.6 percent quarter on quarter and 6.6 percent year on year, and it has named it a top large-cap pick.
HCLTech: HCL Technologies was up 2.2 percent at Rs 1,248.80, completing the top three Nifty gainers. Kotak expects around 2 percent organic growth, led by the ramp-up of the Guardian Life deal, and it expects the company to raise its growth guidance to 3 to 4 percent from 1 to 3 percent. That makes HCLTech one of the better-placed names among the large caps.
Wipro: Wipro advanced 2.7 percent to Rs 161.08. The bounce looks stronger than the outlook. Jefferies expects Wipro to lag its large peers and guide softly for Q3, in a range of minus 1.5 percent to plus 0.5 percent quarter on quarter.
Infosys: Infosys was the odd one out. The stock was marginally down around 10:45 am, although ET’s earlier morning snapshot had it up about 1 percent. Jefferies expects it to cut its FY27 revenue growth guidance by 100 basis points to 0.5 to 2.0 percent, which could explain the lack of enthusiasm.
Coforge: Coforge led the midcaps. The stock jumped 4.8 percent to Rs 1,803.15. ET’s report had it up as much as 6 percent around 10:20 am. The stock also has research support, as Kotak lists it among its preferred picks in the mid and small-cap space.
Hexaware Technologies: Hexaware climbed 4.3 percent to Rs 502.75. It was one of the larger gainers in the mid-sized group. Jefferies expects mid-sized IT firms to grow 3.5 percent quarter on quarter in constant currency, against 0.5 percent for large caps, and investors seem to be paying for that gap.
Oracle Financial Services Software: OFSS advanced 3.9 percent to Rs 10,804.45. It is the most expensive share on this list by far. The banking software maker was one of six IT names among the top 10 BSE Midcap gainers.
Tata Technologies: Tata Technologies rose 3.9 percent to Rs 714.70. The engineering and product development services company is not a typical IT services name, but it moved with the sector.
Persistent Systems: Persistent gained 2.6 percent to Rs 5,338. That was one of the smaller moves among the midcaps, though ET’s earlier snapshot had it up about 4 percent, which suggests some of the early gains faded.
Mphasis: Mphasis was up 2.3 percent at Rs 2,238.50. The stock sits at the lower end of the midcap gains, and like Persistent it had been higher earlier in the session.
What Do Analysts Expect from Q2?
The mood on the screen is better than the mood in the research notes. Jefferies expects large IT firms to post their weakest Q2 growth in three years, with large caps growing 0.5 percent quarter on quarter in constant currency. Margins could improve by about 30 basis points thanks to currency tailwinds. Kotak also expects a muted quarter for the large caps, with AI-led deflation and weaker macros weighing on growth.
Guidance is the real worry. JM Financial says the industry is entering its fourth year of subdued growth, with AI-led productivity and rising competition adding to the pressure. Jefferies also warns that the demand environment is not improving and that rising oil prices and interest rates are not helping.
What Should Investors Keep in Mind?
A one-day bounce after an eight-day slide does not make a trend. The rally rests mostly on shifting rate expectations and a stronger dollar, and both can change quickly. Investors are now waiting for a key US inflation reading for clues on interest rates. The earnings season will decide whether the sector can hold these gains, especially the guidance for FY27 and the deal pipeline. Look closely at growth outlooks and margins before buying into the rebound.