TCS, Infosys, Coforge jump up to 5%: Why are IT stocks rising for 2nd straight day?
IT stocks extended their rally for a second straight session on Wednesday, helping lift the broader market as investors continued to rotate into the sector
IT stocks extended their rally for a second straight session on Wednesday, helping lift the broader market as investors continued to rotate into the sector ahead of the US Federal Reserve's policy decision later in the day. The BSE Sensex climbed 758.30 points, or 0.99%, to 77,524.22 in early trade, while the NSE Nifty50 gained 217.20 points, or 0.91%, to 24,202.55 as of 9:55 am. Read Full Story Technology shares once again led the gains. The Nifty IT index jumped 2.45%, taking its gains over the last four sessions to nearly 11%. Among the biggest gainers were Coforge, which surged 4.39%, Infosys (3.26%), LTIMindtree (2.68%), Persistent Systems (2.65%), TCS (2.55%) and Oracle Financial Services Software (2.35%). Wipro, Tech Mahindra and HCLTech also traded firmly in the green. The latest rally is being driven by two key factors—a global shift towards Indian IT companies as AI-linked stocks come under pressure, and expectations that the US Federal Reserve will keep interest rates unchanged. INDIAN IT EMERGES AS A SAFE HAVEN The first trigger remains the same one that sparked Tuesday's rally. For nearly two years, Indian IT companies were criticised for "missing the AI bus" as global investors poured billions of dollars into AI chipmakers, semiconductor companies and hyperscalers building data centres.
That narrative is now beginning to reverse. Technology stocks across South Korea, Japan and Taiwan have witnessed heavy selling as investors question whether the massive investments in AI infrastructure will generate adequate returns. Concerns over stretched valuations, rising competition from Chinese companies and slowing returns on AI spending have prompted investors to reduce exposure to hardware-focused technology stocks. Unlike global AI leaders, Indian IT companies are largely services businesses. Companies such as TCS, Infosys, HCLTech, Tech Mahindra and Wipro generate revenues from software services, cloud migration, digital transformation, consulting and enterprise technology rather than manufacturing AI chips or investing billions in AI infrastructure. Because of this asset-light business model, they are relatively insulated from the ongoing correction in AI hardware stocks. Investors are therefore rotating into Indian IT as a relatively defensive technology play. Ironically, what was once seen as India's biggest weakness in the AI race is now emerging as one of the sector's biggest strengths. WHY THE FED DECISION MATTERS The second reason behind the rally is the US Federal Reserve's policy decision due later on Wednesday. According to the CME FedWatch Tool, markets see around a 70% probability that the Fed will keep interest rates unchanged, while there is roughly a 30% chance of a 25-basis-point hike.
The BriefWire