Nifty IT surges 5.2% to log biggest single-day gain in 17 months

All 10 constituents of the Nifty IT index ended higher. HCL Technologies led the gains, surging 8.42%

All 10 constituents of the Nifty IT index ended higher. HCL Technologies led the gains, surging 8.42%, followed by Tata Consultancy Services at 6.8%, Coforge at 4.46% and Infosys at 4.13%. The rally helped the Nifty 50 advance 1.6% to 22,721.95, while the Sensex rose 1.54% to close at 73,033.78.

HCL's second quarter net profit rose 21.2% year-on-year, beating analyst expectations. The earnings performance eased investor sentiment, which has been weighed down by concerns about AI-led disruption and slowing growth in traditional software services.

A stronger dollar provided additional support to Indian IT exporters, which earn a substantial share of their revenues in foreign currencies.

The Nifty IT Index is still down over 21% so far against the 13% decline in the Nifty.

The Nifty IT index also broke above the 27,614-28,755 range in which it had traded between September 24 and October 12, according to Sudeep Shah, head - Technical and Derivatives Research at SBI Securities. "The RSI is trending higher and approaching the 60 mark, signalling renewed bullish momentum. The zone of 28,600-28,500 is likely to act as immediate support, and the index may extend its pullback as long as it sustains above this zone," Shah said.

"The sector may remain positive in the near term, supported by improving sentiment and buying interest following HCLTech's results, but after a sharp single-day rally, some profit-booking and volatility cannot be ruled out," said Gaurav Garg, head-research, Lemonn.

Garg advised investors against chasing the rally, recommending a focus on companies with strong earnings visibility, healthy deal conversion and stable margins.