On a day marked by struggles across most sectors on Dalal Street, information technology (IT) stocks stood out, defying market trends to deliver robust gains. The strong performance of heavyweight IT stocks like Tata Consultancy Services (TCS), Wipro, Infosys, Tech Mahindra, and HCLTech played a crucial role in providing much-needed support to the benchmark indices, which had faced a significant downturn in the previous session.
TCS shares saw a rise of 3.04%, reaching Rs 4,158.45 by 3:00 pm, while Wipro surged by 3.37%, trading at Rs 308.40. Infosys also experienced a healthy gain of 3.11%, climbing to Rs 1,856.70. Other prominent IT stocks, including HCLTech and Tech Mahindra, were also trading 1-3% higher, despite the rising volatility and negative sentiment that dominated the broader market. This upward momentum in IT stocks provided a sharp contrast to the broader market, which remained volatile.
A mix of positive developments seems to have contributed to the IT sector's strong showing on the day. One key factor is the easing of tariff threats from the US. US President Donald Trump refrained from imposing stringent tariffs after returning to the White House, which had initially caused market concerns. While this decision brought some volatility to global markets, it appeared to provide temporary relief to IT firms, particularly those with significant exposure to the US market. According to Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the stock markets may have overreacted to Trump’s earlier tariff threats, and his decision not to follow through with tariffs has helped lift investor sentiment.
In addition to Trump's tariff news, IT stocks gained momentum from the positive performance of US markets. The Dow Jones Industrial Average rose 1.24%, while the Nasdaq Composite gained 0.64%, which positively impacted investor sentiment toward IT stocks on Dalal Street. The correlation between US market performance and Indian IT stocks has been a recurring trend, and the rally in US indices likely contributed to the upbeat mood in the domestic IT sector.
Furthermore, the strong Q3 earnings from major IT companies have added fuel to the rally. Large-cap IT companies like TCS, Infosys, and Wipro delivered strong financial results, reassuring investors about the stability and growth potential of the sector. The positive performance of these companies set the tone for the sector's gains, and expectations remain high for other key players like Coforge and Persistent Systems, who are set to report their third-quarter results later in the day. Analysts are anticipating similarly strong results from these firms, which could continue to support the momentum in IT stocks.
Overall, the IT sector’s strong performance on Dalal Street today highlights its resilience amid broader market challenges. The sector’s positive momentum was driven by both external factors like US market performance and internal factors such as solid earnings from leading IT companies. While the market remains volatile, IT stocks seem to have found a solid footing, offering investors a bright spot in an otherwise uncertain trading environment.
