IT stocks rebound sharply in October: TCS gains 22%, Wipro and Tech Mahindra gain 20% — 3 key reasons behind the jump
A Ksheerasagar
Domestic technology stocks have staged a strong turnaround in October after suffering heavy losses, as better-than-expected September-quarter performance, attractive valuations, and fears of a global AI slowdown have prompted investors to turn their attention back to software stocks, making the Nifty IT index a standout performer.
TCS was among the top performers in the pack, surging 22% in October, followed by Tech Mahindra and Wipro, with each surging 20%. Mphasis was next on the list with a 16% rally. Infosys gained 16%, while HCL Technologies advanced 15.5%.
The rally follows a global selloff in software stocks earlier this year, as some investors feared that AI could disrupt their business models. Slowing revenue growth amid geopolitical concerns and rising client demand for lower prices also sapped investor sentiment.
Amid strong support from heavyweight stocks, the Nifty IT index advanced 16% and reclaimed the 30,000 mark, touching its highest level in eight months last week. The gauge has now recovered 22% from its July low but remains down about 18% this year, putting it on track for its worst annual performance since 2022.
The combined market capitalisation of Nifty IT stocks increased from about ₹22.01 lakh crore to ₹25.88 lakh crore, an increase of ₹3.87 lakh crore.
The September-quarter results have offered investors some reassurance about the sector’s near-term growth prospects, helping revive sentiment towards IT stocks.
Stronger-than-expected performances from major companies have also eased some concerns over slowing demand and the potential impact of artificial intelligence on traditional software services.
Tech Mahindra’s second-quarter revenue came in above expectations, aided by robust deal wins, while Wipro also reported stronger-than-expected quarterly revenue, with signs that delayed large deals could support growth in the coming quarters.
HCLTech’s quarterly performance, stronger AI-related revenue, and healthy deal wins bolstered confidence in the sector’s earnings outlook. TCS also delivered a healthy set of second-quarter results.
The sector’s bellwether, Infosys Ltd, is due to release its second-quarter earnings and commentary on October 23, with the Bengaluru-based firm expected to report revenue growth of just 1.8%.
Jefferies believes Indian IT stocks could see a valuation re-rating as earnings resilience challenges pessimistic assumptions about long-term growth. In its October 21 note, the brokerage said the sector's share-price correction had already factored in lower growth expectations, leaving room for recovery if companies avoid further disappointments.
“With IT firms still delivering growth despite weak macro and AI deflation, investors are more willing to revisit their terminal growth assumptions,” the brokerage said in a note.
Jefferies cautioned that the sector's outlook remains uncertain, particularly if global AI capital expenditure sentiment deteriorates or companies fall short of FY27 and FY28 growth expectations. Any re-rating, therefore, is likely to depend on individual companies' ability to sustain revenue growth, deliver earnings, and justify higher valuation multiples rather than a broad-based recovery across the entire IT sector.
A Ksheerasagar
Ksheera Sagar has been working as a Market Research Analyst at LiveMint for the past four years, covering stocks, commodities, and broader financial markets. In this role, he closely tracks daily market movements, corporate earnings, sector trends, and macroeconomic developments. <br><br> He has over a decade of experience in the financial services industry and has previously worked with multiple organisations, including global investment bank J.P. Morgan, bringing strong research experience into the newsroom. <br><br> During his career, he has gained extensive exposure to equity research, market analysis, and financial data interpretation, strengthening his expertise across asset classes and market cycles. <br><br> He is known for his data-driven analysis and crisp, listicle-style market stories that break down complex financial developments across key markets for a wide audience. His strong research skills enable him to write detailed and insightful stories on stocks and sectors, focusing on the underlying factors driving market movements. <br><br> His work combines quantitative insights with clear storytelling, presenting financial developments in a clear and structured manner. Moreover, he enjoys writing multibagger and listicle-style copies. Outside of work, Ksheera enjoys playing the piano and exploring new places. He has a keen interest in travel, music, and continuously learning about global markets and economic trends.
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