IT Stocks Jump Over 3%: What Triggered The Rally?

Technology stocks rallied sharply in today’s trade, with the Nifty IT Index climbing over 3%, led by gains in Infosys and HCL Tech. Most IT majors traded in the green, with top gainers including Infosys, HCL Tech, TCS, Mphasis, Persistent Systems, and Wipro. Not just that, the top three Nifty50 gainers are IT stocks. But what triggered the IT stock rally? 

The India-US Trade Deal Buzz
The optimism was driven by the India-US trade deal buzz, which could ease the trade tension and benefit IT exports. As the two countries inch closer to a trade deal, the US is likely to cut tariffs on Indian imports to 15-16% from 50%, as per reports. India might agree to reduce Russian Oil imports. 

Positive Earnings Results
The Q2 results of IT companies were also surprisingly positive, further supporting the rally. Investor confidence likely boosted after Q2 results. Infosys, Wipro, TCS, HCL, and Tech Mahindra delivered decent results amid low expectations. 

Infosys Promoters Retain Shares: Opt Out Buyback
As far as individual companies are concerned, Infosys' share price increased on Thursday, after the promoters decided to opt out of the buyback. The company promoters, including Narayana Murthy and Nandan Nilekani, retained their holdings and said that they wouldn't be part of Infosys' Rs 18,000 crore share buyback. Infosys' share price increased as much as 5% intraday on Thursday. 

HCL Technologies Partners With UAE-based DIB
HCL Technologies' share price jumped 3% after it partnered with UAE-based DIB to accelerate AI adoption across its ecosystem. However, HCL Tech shares have declined 20% so far this year, underperforming the benchmark Nifty 50, which has gained 10.3% during the same period.

Conclusion
IT stocks are gaining momentum in India. In fact, considering the GenAI adoption scenario, Kotak Institutional Equities recently bet high on IT services. "As Gen AI continues to evolve, so will the narrative for Wipro—and for those tracking the direction of AI-driven IT stocks in India, this is one to watch closely," the report stated.