- The Nifty IT index jumped nearly 3% in early trade on Friday, with LTM, Coforge, TCS, and TechM gaining up to 5% each.
- The index became the top sectoral gainer, outperforming the broader market, with all 10 constituents trading higher.
- Nvidia's strong results and upbeat revenue forecast lifted global technology stocks, contributing to the rally in the Nifty IT index.
- US markets closed higher on Thursday, with the Nasdaq advancing 1.57%.
- Investors are awaiting Fed Chair Kevin Warsh's speech at Jackson Hole for signals on inflation and interest rates.
- The Nifty IT index has outperformed the market by soaring 15% over the past two months, supported by reasonable valuations and attractive yields.
- Analysts noted that AI-led revenue deflation and rising pricing pressure in managed-services deals could weigh on growth in the near to medium term.
The Nifty IT index soared 3% on Friday, with stocks like LTM, Coforge, TCS, and Tech Mahindra gaining up to 5%. This surge was fueled by Nvidia's strong revenue forecast, which bolstered optimism in the AI sector.12
"The results reassured investors on the durability of the global AI boom," said Devarsh Vakil, head of prime research at HDFC Securities.
The index outperformed the broader market, rising 3.27% to 31,266.55, as all 10 constituents traded higher.34
"The IT sector has emerged as a key outperformer, gaining nearly 3% on the back of a supportive global technology backdrop and renewed optimism around the AI theme following Nvidia's upbeat results and outlook," noted Ponmudi.
The rally in Indian IT stocks followed a strong performance by US technology shares, with the Nasdaq advancing after Nvidia's forecast boosted confidence in AI-led growth.
Meanwhile, global markets are awaiting Federal Reserve Chair Kevin Warsh's speech for insights on inflation and interest rates, as markets price in a 35% chance of a rate hike in September.
"The positive global sentiment is providing support to Indian IT stocks and lifting sentiment across the sector," said analysts.
The Nifty IT index has gained 15% over the past two months, reflecting improving sentiment and healthy deal pipelines, although analysts caution about potential growth challenges ahead.
“The rally lifted all 10 constituents, with LTIMindtree the top gainer at around 5% and Coforge up nearly 4%. Investors now await Fed Chair Kevin Warsh's Jackson Hole speech, with markets pricing in a 35% chance of a rate hike in September.”
CNBC TV18
