Tech Stocks Continue Rally for Second Consecutive Session, Nifty IT Index Surpasses 2% Gain

Indian Tech Stocks Bounce Back as Rupee Depreciation Benefits Kick In

The Indian tech sector saw a significant rally on Monday, May 18, with several key stocks leading the charge. Coforge led the gains with a 4.4% surge, followed closely by Tech Mahindra with a 4.1% advance. Other notable performers included Persistent Systems, Oracle Financial Services Software, Mphasis, and Infosys, which all traded higher, with gains ranging between 1% and 4.1%.

The NIFTY IT index, which tracks the performance of 10 key constituents, rose 2.4% to a high of 28,358. This marked a significant improvement from the previous day's session, which saw a 1.3% gain. The rally was attributed to the continued weakness in the domestic currency and the sector's transition into a defensive hedge.

Despite the recent gains, the Indian tech sector has remained under pressure for much of 2026. The sell-off began in February, following the rollout of Anthropic's Claude Code and concerns that rapid advances in generative AI could disrupt demand for traditional IT and professional services. The weakness extended further after OpenAI announced plans to launch a new company backed by over $4 billion, aimed at embedding engineers within organizations to identify areas where AI can deliver the greatest impact.

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Indian IT companies derive a significant portion of their revenue from North America and are highly sensitive to US economic uncertainty and corporate technology spending trends. The sector's poor performance in the March-quarter earnings and guidance for the new financial year further worsened sentiment, triggering a sharp unwinding of positions by overseas investors. As a result, the tech sector has become one of the worst-performing sectors in 2026.

Comparison of Sector Performance

The muted growth outlook remains a key overhang for Indian IT stocks. While the earnings performance of Indian IT companies was mixed, the bigger concern for investors was the growth guidance issued by several IT majors for FY27. HCL Technologies has forecast revenue growth of 1–4% in constant currency terms, lower than its initial guidance range of 2–5% in the previous financial year. Infosys also expects revenue growth to moderate, guiding for 1.5%–3.5% growth in constant currency terms. However, Infosys has maintained its operating margin guidance at 20%–22% for FY27.

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Wipro projected IT services revenue in the range of $2,597 million to $2,651 million for Q1FY27, implying sequential growth of -2% to 0% in constant currency terms. On the other hand, Tata Consultancy Services (TCS) reported relatively healthy numbers, with the management expecting international revenue growth in FY27 to be higher than FY26, supported by a strong deal pipeline and recent client wins.