IT stocks rallied in early trade on Friday, lifted by strong buying across the board. The Nifty IT index surged 2.75% to surpass 31,000 level.
LTM, Coforge, Tech Mahindra and Tata Consultancy Services (TCS) were the top gainers on the Nifty IT index with over 3% rally each.
Infosys, HCL Technologies, Mphasis, Persistent Systems, Oracle Financial Services Software and Wipro shares also gained more than 2% each.
The rally in Indian IT stocks followed gains in global technology shares, after chip giant Nvidia posted stronger than expected earnings for the second quarter, and issued a bullish sales outlook, reinforcing expectations of sustained spending on AI infrastructure.
Overnight on Wall Street, the tech-heavy Nasdaq Composite closed 411.16 points, or 1.57%, higher at 26,541.35 on Wednesday. Nvidia stock price surged over 8%.
“The recent rally in IT stocks reflects a combination of improving technical structure and supportive global technology cues. The strong rally in global technology stocks, led by Nvidia following its robust earnings and upbeat AI-driven revenue outlook, has improved sentiment across the broader technology space and provided a positive trigger for Indian IT stocks,” said Hitesh Tailor, Technical Research Analyst at Choice Broking.
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Nvidia reported better-than-expected second-quarter earnings and issued a bullish sales outlook, reinforcing expectations of sustained spending on AI infrastructure.
The company's Q2 revenue more than doubled year-on-year (YoY) to $96.22 billion, surpassing analysts' estimate of $92.17 billion, while earnings per share (EPS) was at $2.22.
The chipmaker also gave higher than estimated guidance for the third quarter. It expects its revenue in the third quarter of fiscal 2027 at $108 billion, plus or minus 2%, implying sequential growth of around 12%. The company expects gross margin at 74%, plus or minus 50 basis points, reflecting some moderation as newer platforms ramp up.
Analysts believe Nvidia's strong results suggest that hyperscalers and enterprises continue to spend aggressively on AI infrastructure, which could have positive implications for the deal pipeline of Indian IT services companies.
However, the impact on Indian IT companies is likely to be more gradual, while AI-led pricing pressure remains a key headwind for the sector.
Technical Outlook
The Nifty IT index witnessed a mild retracement after breaking above the recent lower-high formation, and subsequently took support above its 50-Day and 100-Day EMAs, indicating renewed buying interest at lower levels.
“From a technical perspective, 30,000 has now emerged as an important base support for the short term, and sustaining above this level would keep the positive bias intact. On the higher side, 31,600 – 31,700 remains the immediate resistance zone, aligned with the 200-Day EMA, while 32,000 is the key resistance and recent swing high from where the index had witnessed retracement,” said Tailor.
According to him, a decisive breakout above 32,000 would indicate a short-term upside rally and strengthen the overall recovery structure. The daily RSI is around 57, having taken support near the midpoint and bounced back, indicating improving momentum with further room for upside.
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