IT stocks extend rebound for second day: Time to buy?
What's the story
Indian IT stocks have witnessed a rally for the second consecutive day, with industry giants Infosys and Tata Consultancy Services (TCS) witnessing gains of 2-3%. The upward trend comes after a major sector-wide sell-off earlier this week. Despite the headline indices remaining mostly flat, there is selective buying in technology counters due to recent steep losses.
Market performance
Nifty IT index outperforms broader market
During the morning trade, the Nifty IT index was up 0.88% to 30,796, outperforming the broader market. The BSE Sensex rose by 48 points or 0.06% while the Nifty50 gained by 31 points or 0.12%. The market breadth remained positive during this period of recovery for Indian IT stocks.
Stock performance
HCL Tech, TCS, Tech Mahindra, Infosys among top gainers
Among the top gainers on Nifty50, HCL Technologies shares rose by 3.7% to ₹1,388.5 while TCS gained nearly 3% to ₹2,649.9. Tech Mahindra also saw a rise of 2.5% to ₹1,379.5 and Infosys advanced just over 2% at ₹1,302.2 per share. This period of market recovery in Indian IT stocks comes after a major sector-wide sell-off earlier this week due to fears surrounding AI disruption's potential impact on traditional business models within the sector's service offerings globally and in India.
Investor sentiment
Recovery in Indian IT shares after AI disruption fears
The recent gains in Indian IT stocks come after a period of heavy selling pressure. This was mainly due to concerns that rapid advancements in artificial intelligence (AI) could disrupt the traditional IT services business model. The fears were exacerbated by Anthropic's comments on automating legacy software modernization, a key revenue stream for many IT services firms.
Market recovery
Global tech sentiment improves as Wall Street rallies
The recovery in Indian IT shares is also mirrored by an improved global tech sentiment after Wall Street's recent rally. Gains in technology counters have helped ease fears around AI-led disruption. Follow-up comments from Anthropic suggesting a greater focus on partnerships rather than outright displacement of existing business models have also calmed investor nerves during this period of market recovery for Indian IT stocks after a major sector-wide sell-off earlier this week due to fears surrounding AI disruption's potential impact on traditional business models within the sector's service offerings globally and locally in India.