IT stocks rally up to 8%: Here’s what is fueling the surge

Indian IT stocks extended their recovery on Tuesday, with the Nifty IT index logging gains for the second consecutive session. The rally was broad-based, as most large- and mid-cap names advanced, reflecting renewed optimism in the sector.

The shares of Oracle Financial Services Software (OFSS) led the rally, trading 8% higher at Rs 9,092, with Persistent Systems shares following, rising 4.7% to Rs 5,372.

Mphasis shares followed closely, gaining 4.6% to Rs 2,984.80, Coforge shares advanced 3.6% to Rs 1,757.30, while LTIMindtree shares rose 3.5% to Rs 5,368.50.

Among frontline IT majors, Wipro added 2.7% to Rs 255.8 and HCLTech gained 2.4% to Rs 1,461.9, both benefiting from defensive buying after a period of underperformance. Tech Mahindra shares rose 2.2% to Rs 1,531.4. Further, the shares of Tata Consultancy Services (TCS), the largest IT services exporter, gained 1.9% to Rs 3,108, while Infosys shares were up 1.5% at Rs 1,527, supported by buyback-related buzz.

So what is really driving the surge?

Trade optimism between India and US

A major sentiment booster came from the political front, where trade relations between India and the United States took center stage. The US President Donald Trump posted on X: “I am pleased to announce that India, and the United States of America, are continuing negotiations to address the Trade Barriers between our two Nations… I feel certain that there will be no difficulty in coming to a successful conclusion for both of our Great Countries!”

Prime Minister Narendra Modi also struck an optimistic tone, saying on X: “India and the US are close friends and natural partners. I am confident that our trade negotiations will pave the way for unlocking the limitless potential of the India-US partnership… We will work together to secure a brighter, more prosperous future for both our people.”

This public show of alignment between the two leaders is significant for Indian IT, as the sector derives over 55–60% of its revenues from the US. Tariff-related headwinds and policy uncertainty had weighed on valuations in recent months.

The latest exchange of statements revived hopes that easing trade barriers could improve client budgets and cross-border business activity, creating a more supportive environment for IT exporters.

Oracle’s strong cloud outlook lifts OFSS sentiment

Global cues also played a role in today’s rally. The shares of Oracle Corp, the parent company of OFSS, surged to a record high overnight after the company announced an aggressive growth outlook for its cloud business, driven by soaring demand for AI infrastructure.

Oracle’s cloud revenue jumped 55% to $3.3 billion in the latest quarter, underscoring how hyperscalers and enterprises are ramping up AI-related investments.

The positive outlook spilled over to Oracle Financial Services Software (OFSS), its Indian subsidiary, whose performance is closely linked to the parent’s global positioning. Oracle’s bullish commentary highlighted the broader strength in cloud and digital demand, indirectly uplifting investor sentiment toward Indian IT companies that act as outsourcing and cloud integration partners.

Infosys buyback consideration

Domestic triggers were equally important. Infosys, on Monday, announced that its board will consider a proposal for buyback of fully paid-up equity shares on September 11. If approved, this will be the fifth share buyback by Infosys, reinforcing its capital allocation discipline and shareholder return strategy.

Buybacks generally create value for investors by reducing the outstanding equity base, thus improving earnings per share (EPS). In Infosys’ case, the move is seen as a sign of management’s confidence in cash flows and long-term growth prospects.

Rupee depreciation

Currency movements provided another tailwind. The Indian rupee recently breached the 88-mark against the US dollar. While this raises macroeconomic concerns, for IT exporters, it acts as a natural margin lever.

Since IT companies earn a significant portion of their revenues in US dollars but incur most costs in rupees, a weaker domestic currency directly boosts profitability. This dynamic reassured investors that, despite weak discretionary spending trends in the US, Indian IT firms could still protect earnings through forex gains.

Broader US market linkages

Beyond immediate headlines, Indian IT stocks continue to shadow global technology sentiment. The sector is tightly tied to US corporate technology spending, especially in banking, financial services, insurance (BFSI), telecom, and retail verticals. Developments in the Nasdaq and large-cap US tech firms often serve as a barometer for the demand outlook.

With multiple domestic and global triggers aligning — trade optimism, positive global tech cues, Infosys’ buyback plan, and rupee depreciation — the Nifty IT index has found renewed momentum.

While the rally reflects a shift in sentiment, the sustainability will hinge on the actual resolution of trade issues, client budget visibility in the US, and quarterly deal flows. For now, IT remains firmly in focus as investors position for potential upside.

Also read: Apple takes $1 bn tariff hit without raising prices for iPhone 17 lineup; stock ends 1.5% lower

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