Nifty IT Sector Rallies 2.5% as US Software Earnings Boost Optimism

Indian IT Stocks Witness Strong Buying Momentum

Domestic technology stocks experienced a significant surge in buying momentum on Monday, June 1, despite the benchmark indices struggling to hold onto their intraday gains. The sector's sentiment has started to improve after months of weakness, driven by attractive valuations and the strong rally in US software stocks. This renewed optimism has helped Indian IT counters recover some of their recent losses.

The Nifty IT index, which comprises 10 key constituents, ended in the green, with Persistent Systems leading the gains by surging 4%. It was followed by Tech Mahindra, Infosys, Larsen & Toubro, Coforge, and Oracle Financial Services, all of which rallied more than 2.5%. Other major IT stocks, including Mphasis, Tata Consultancy Services, Wipro, and HCL Technologies, also ended higher with gains ranging between 1% and 1.7%. The Nifty IT index finished the session with a solid gain of 2.66% at 29,854.

The rally in heavyweight IT counters was partly driven by the easing of fears surrounding AI disruption. In February, technology stocks witnessed a massive sell-off after concerns emerged that advanced AI tools, especially from startups such as Anthropic and its Claude Code platform, could disrupt traditional software business models. However, stronger-than-expected first-quarter earnings from major US software companies such as Salesforce, ServiceNow, Snowflake, and Palantir Technologies reassured investors that demand for software services remains strong despite the rapid rise of AI adoption.

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Salesforce's revenue for the quarter ended April 30 rose 13% to $11.1 billion, supported by $444 million in sales linked to its November acquisition of Informatica. Adjusted profit stood at $3.88 per share, significantly ahead of analysts' average estimate of $3.13 per share. Snowflake, which helps companies organize, analyze, and store corporate data in the cloud, reported a 34% rise in product revenue to $1.33 billion for the fiscal first quarter ended April 30, surpassing analysts' average estimate of $1.27 billion.

Back home, Wipro announced an extension of its partnership with ServiceNow. The collaboration will focus on deploying agentic AI workflows across key enterprise functions, including information technology, human resources, procurement, and cybersecurity. This development further revived confidence in technology stocks. Additionally, Mphasis Limited gained traction after its analyst day, where the company said it is transitioning from a traditional services-led model to a platform-plus-outcome-based approach from FY27.