Shares of Indian IT companies witnessed strong buying interest on Tuesday, with Infosys and Tata Consultancy Services (TCS) gaining around 6%, as renewed optimism around artificial intelligence (AI) and a sharp rebound in global tech stocks boosted sentiment across the sector.

TCS emerged as the top gainer on the BSE Sensex pack, rising more than 6%, while Infosys advanced nearly 6%. Other technology stocks also participated in the rally, with HCLTech and Tech Mahindra gaining over 5% and 2%, respectively.

The rally extended beyond frontline IT heavyweights. Coforge jumped 5.1%, Mphasis gained 4.6%, Persistent Systems rose 3.1%, and LTIMindtree added 3.2%, reflecting broad-based optimism across the technology services space. Even defensive IT names such as Wipro traded higher, gaining nearly 1%.

The broad-based buying pushed the Nifty IT index to the top of the sectoral gainers' list, with the index rising over 4.4%. Large-cap and mid-cap technology stocks witnessed strong buying interest amid improving sentiment toward the sector.

Market participants attributed the sharp move to the continued rebound in global software stocks, particularly companies seen as beneficiaries of accelerating AI adoption. Expectations that enterprises will maintain spending on cloud computing, data analytics, and AI-led digital transformation initiatives have helped improve sentiment after months of concerns over macroeconomic uncertainty and cuts in discretionary technology spending.

The gains also come at a time when investors are reassessing the earnings outlook for Indian IT companies. With a significant portion of their revenues tied to overseas markets, particularly the US, any improvement in demand expectations for technology services tends to have an outsized impact on domestic IT stocks.

Outperforms benchmark indices  

Meanwhile, Indian equity benchmarks - the Sensex and Nifty 50 - were trading in the red. The Sensex was down 183.85 points, or 0.25%, at 74,083.49, while the Nifty 50 declined 81.35 points, or 0.35%, to 23,301.25. Investor sentiment remained subdued amid persistent foreign institutional investor (FII) selling, concerns over slowing economic growth, elevated inflation risks, and uncertainty surrounding the West Asia conflict.

According to V K Vijayakumar, Chief Investment Strategist at Geojit Investments, India continues to underperform several global peers even as AI-driven rallies push markets in the US, South Korea, and Taiwan to record highs. He noted that rising energy prices have led to downward revisions in India's GDP growth forecasts and upward revisions in inflation expectations. The latest India Meteorological Department (IMD) projection of monsoon rainfall at 90% of the long-term average has further heightened concerns over growth and inflation.

Vijayakumar said that a resolution of the West Asia conflict and a decline in crude oil prices would be key positive triggers for the market. He advised investors to focus on asset allocation and remain patient amid the prevailing uncertainty.

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