Nifty IT Index Surpasses 29,000 on Strong Gains by Oracle, Wipro, Tech Mahindra

IT Stocks Witness Fresh Buying on Monday Amid Weakening Rupee

Technology stocks in India witnessed a fresh wave of buying on Monday, 25 May, as investors looked to capitalize on the gains made last week. The Nifty IT index rose almost 1% to reach a high of ₹29,177.80 apiece, with all constituents in the green. This comes after the IT pack rose 4.31% last week, despite remaining flat with a negative bias for the month so far.

The top gainer in the index was Oracle Financial Services Software (OFSS), which rose over 3% to ₹9,834 apiece on the National Stock Exchange (NSE). Wipro was also a notable gainer, trading over 2% higher following the announcement of its buyback record date last week on Friday. Other IT companies such as Mphasis, Persistent Systems, Tech Mahindra, Coforge, and TCS traded 1-2% in the green, while HCL Technologies, Infosys, and LTIMindtree rose but less than 1% each.

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The rebound in IT stocks can be attributed to the sharp depreciation in the Indian rupee and value buying after heavy selling in the first quarter of the calendar year. A stronger dollar raises expectations of better profit growth for companies that earn a large share of revenue in the greenback. Additionally, analysts believe that IT stocks have already corrected significantly, and dividend yields are attractive at these levels for companies like TCS and others.

Despite the rise, the Nifty IT index remains the worst-performing sector on the NSE, having lost over 22% so far this year amid fears of AI-led disruption for the labour-intensive Indian IT services sector. However, prominent market investors continue to find opportunities in IT, even as broader sentiment towards the sector remains cautious.

Sankaran Naren of ICICI Prudential AMC described the current setup as a "contrarian valuation call", while acknowledging that the industry still faces genuine disruption risks from AI. "It is a contrarian valuation call. But whether it is a value trap, that is not clear," he said. Naren also argued that if AI-led disruption becomes as severe as some fear, its impact would likely extend beyond IT services alone.

Rajeev Thakkar of PPFAS Mutual Fund pointed out that Indian IT companies have repeatedly survived existential concerns over the past three decades. Top three Indian stocks remained among his top picks in the month of April. "In the late 1990s, people thought these companies were only about Y2K. Then came the dotcom crash. Later during the SaaS wave, people questioned why clients would even need IT services companies," he said. According to Thakkar, the industry has historically adapted to technological change rather than being displaced by it.

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Thakkar referred to the economic principle known as Jevons' Paradox, where lower costs can lead to higher overall consumption. He argued that productivity gains from AI may ultimately expand demand rather than shrink it, drawing parallels with industries such as telecom and discount broking.