IT stocks have been on a roll over the last few sessions boosted by better-than-expected Q2 results and selloff in AI stocks globally as investors shift their focus from hype to financial performance and structural outlook. The Nifty IT index surged 3.92% on Friday, 16 October, extending gains for the fourth consecutive session. In just four sessions, the index has jumped nearly 13%.
IT stocks are rising after a prolonged period of stress due to macroeconomic challenges, cautious discretionary spending by clients, and AI-led disruptions.
The sector remains at a crucial juncture as experts believes, the next leg of growth will depend on translating deal wins into revenue and scaling AI-led services sufficiently to offset productivity-driven deflation in traditional engagements.
The Q2 numbers of several IT players, including TCS and HCL Tech came better-than-expected.
Sumit Pokharna, SVP- Fundamental Research at Kotak Neo, said the demand environment has not materially changed since the last quarter. Discretionary programs without near-term value remain under scrutiny. AI revenue grew faster in BFSI relative to other verticals.