IT shares surge most in a year, helping benchmarks end losing streak
Information technology (IT) shares recorded their biggest single-day advance in over a year on Tuesday amid growing confidence that AI adoption may complement, rather than disrupt, the sector.
The Nifty IT index ended at 31,117, gaining 4.2 per cent, their biggest single-day gain since May 12, 2025. The rally extended the Nifty IT index’s three-day gain to 7.6 per cent and also helped the benchmark Sensex and Nifty indices snap their four-day losing streak.
The recent IT rally was also supported by strong earnings from US-based cloud software firm Snowflake that lifted optimism around global software spending.
IT stocks, which had come under pressure in recent months amid concerns over AI-driven disruption to traditional outsourcing models, are now finding favour as investors bet that wider adoption of artificial intelligence could create fresh demand for software services.
The Sensex rose 383 points, or 0.5 per cent, to close at 74,650, while the Nifty50 gained 101 points, or 0.4 per cent, to end at 23,484. The market capitalisation of BSE-listed companies increased by nearly ₹2 trillion to ₹462.68 trillion.
Sentiment also received a boost after US President Donald Trump said talks with Iran were continuing. Earlier reports suggesting that Iran had suspended indirect negotiations had rattled investors. Brent crude fell 1.9 per cent to $93.36 a barrel. Apart from IT, consumer durable stocks were among the top gainers, with the Nifty Consumer Durables index advancing 1.3 per cent.
“Markets recovered from initial losses, led by gains in the IT sector, while continued accumulation in large-cap stocks reflected comfort with valuations, as the Nifty 50 trades closer to its long-term averages than the relatively richer valuations in broader markets. Despite ongoing delays in a Middle East truce, global sentiment remained stable, highlighting resilience in risk appetite,” said Vinod Nair, head of research at Geojit Investments.
With the earnings season largely behind, investor attention is expected to shift to macroeconomic triggers, including the progress of the monsoon and the outcome of the RBI’s monetary policy meeting.
“The monsoon is expected to advance into southern regions this week, providing near-term sentiment support. While rainfall is projected to be below the long-period average and emerging El Niño risks warrant monitoring, healthy reservoir levels—well above the 10-year average—offer a cushion against potential shortfalls,” Nair said.
Foreign portfolio investors (FPIs) sold shares worth ₹8,363 crore, while domestic investors injected ₹9,589 crore.
Market breadth remained mixed, with 2,244 stocks advancing against 1,970 declines. Infosys, up 5.6 per cent, contributed the most to the Sensex’s gains, followed by TCS, which climbed 6.5 per cent. Meanwhile, NTPC (down 2.9 per cent), Axis Bank (-1.9 per cent) and Power Grid (down 1.4 per cent) were the biggest Sensex losers.
“While a weaker rupee provides some support to IT services and valuations in BFSI appear reasonable, we remain mindful of risks such as higher commodity prices and their potential impact on margins in certain growth-oriented sectors,” said Rahul Singh, CIO – Equities, Tata Asset Management.
