India’s Nifty IT index staged a strong comeback on August 20, 2025, rising 2.1% intraday and extending gains for the second consecutive session. After months of underperformance, the rally signals renewed investor confidence in the domestic tech sector, driven by bargain hunting, improved global cues, and selective buying in large-cap IT names.
Key Momentum Highlights
Nifty IT index rose 2.1% to 35,317.20, marking a two-day cumulative gain of nearly 4%
Infosys led the charge with a 2.77% rise, followed by Mphasis (2.2%), LTIMindtree (1.58%), and Tech Mahindra (1.34%)
Broader market sentiment remained positive, with the Nifty 50 trading above 25,000 and the Sensex up 129 points at 81,773.40
Backdrop: A Sector in Recovery Mode
Year-to-Date Performance
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Despite the recent uptick, Nifty IT remains one of 2025’s worst-performing indices, down nearly 20% year-to-date
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The decline was triggered by weak global demand, delayed enterprise tech spending, and margin pressures across Tier-1 IT firms
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Stocks like Wipro, HCL Tech, and Coforge had plunged 20–35% from their recent peaks earlier this year
Valuation Reset and Bargain Buying
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Analysts suggest the current rally is partly driven by valuation comfort, with many IT stocks trading below historical P/E averages
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Institutional investors have begun rotating into IT, viewing the sector as oversold and ripe for medium-term accumulation
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Improved hiring trends and stable attrition rates are also contributing to sentiment recovery
Stock-Specific Action
Infosys surged 2.77% amid reports of new client wins in Europe and a potential AI-led services expansion
Mphasis gained 2.2% on expectations of strong Q2 deal flow and margin resilience
LTIMindtree and Tech Mahindra rose over 1%, supported by renewed optimism in digital transformation demand
Oracle Financial Services Software, Coforge, Persistent Systems, and Wipro posted modest gains between 0.75% and 0.96%
HCL Technologies edged up 0.2%, with analysts watching its upcoming earnings for clarity on enterprise spending trends
Macro and Global Drivers
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The rally coincides with a tech-led rebound on Wall Street, where Nasdaq futures turned positive after a week of declines
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US inflation data showed signs of cooling, reducing fears of aggressive rate hikes and improving risk appetite globally
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Asian markets remained mixed, but Indian IT stocks benefited from their dollar revenue exposure and defensive appeal
Investor Sentiment and Technical Indicators
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Market breadth was strong, with 2,383 stocks advancing on the BSE versus 1,408 declining
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RSI levels for key IT stocks have moved out of oversold territory, indicating potential for further upside
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Derivative data shows fresh long build-up in Infosys and Tech Mahindra futures, suggesting bullish positioning by traders
Forward Outlook and Risks
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While the short-term momentum is encouraging, analysts caution that sustained recovery will depend on Q2 earnings, deal wins, and margin trends
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Currency volatility, especially INR-USD fluctuations, could impact profitability for export-heavy IT firms
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Geopolitical risks and delayed enterprise tech budgets remain headwinds for full-fledged sector revival
Conclusion
The Nifty IT index’s 2.1% surge marks a notable shift in sentiment for a sector that has been under pressure for most of 2025. With valuations now more attractive and global cues turning favorable, investors are cautiously optimistic about a turnaround. However, execution risks and macro uncertainties mean that the road ahead will require resilience and strategic clarity from India’s tech giants.
Sources: Business Standard, Livemint, Nifty Indices, Long Forecast.
