Business · Markets · 17 hrs ago
Indian IT stocks lead October gains as AI trade weakens
Indian IT stocks gained nearly 18% in October, making the sector the strongest performer that month.
The Nifty 50 rose 1.91%, while broader market indices fell.
Analysts linked the rally partly to weaker global AI stocks and more attractive valuations for Indian IT companies.
Results for the quarter ending in September were slightly ahead of expectations: 60% of firms beat revenue estimates and 53% beat estimates for operating margins.
But the share-price rebound does not by itself show that business is growing, and one research firm says client activity has held steady.
AI already accounts for more than a tenth of revenue at TCS and Infosys, according to that firm.
December-quarter results are the next test: growth above 2% from the previous quarter across the four largest companies would suggest that business performance is catching up with the rally.
Indian IT stocks were the strongest-performing sector in October, gaining 17.69 per cent, according to Motilal Oswal.
Analysts linked the rise to weakness in the global AI trade and more attractive valuations.
The Nifty 50 gained 1.91 per cent in October, while broader market-cap indices declined.
IT services companies reported September-quarter results slightly ahead of estimates, with 60 per cent beating revenue expectations.
Greyhound Research cautioned that the AI trade reversal alone does not show whether Indian IT businesses are recovering.
- Who
- Indian IT companies and investors. Analysts and Greyhound Research commented on the sector’s performance.
- What
- Indian IT stocks gained 17.69 per cent in October, making the sector the strongest performer.
- When
- October 2026. The results discussed were for the quarter ending in September.
- Where
- India’s stock market; the article also refers to global AI-heavy indices.
- Why
- Analysts cited weakness in the global AI trade and attractive valuations. Greyhound Research said the AI trade reversal is only one factor and does not explain client activity.
Market analysts
Greyhound Research
What drove renewed interest
Market analysts
The global AI trade weakened and valuations became more attractive, helping lift Indian IT stocks.
Greyhound Research
The AI trade reversal is only one reason for renewed interest and is a poor guide to underlying business performance.
What the rally signals
Market analysts
The sector’s reasonable valuations and improving relative sentiment support buying interest.
Greyhound Research
A rally based on falling AI stocks does not establish that Indian IT is recovering; December-quarter results will be a test.
Indian IT stocks gained 17.69 per cent, becoming the strongest-performing sector for the month.
Greyhound Research said results would be the next test of whether bookings convert into sequential growth.
Hindu BusinessLine published its report on the sector’s October performance.
- IT sector gain
- 17.69 per cent in October
- Nifty 50 gain
- 1.91 per cent in October
- Revenue estimates
- 60 per cent of firms beat estimates
- EBIT margin estimates
- 53 per cent of firms beat expectations
- Next results test
- December-quarter results
1 source
What people are saying
It’s a sentiment-driven market and valuations have become attractive.
The December-quarter results are the next test.
We expect relative sentiment towards Indian equities among foreign investors to improve, driving portfolio flows in the near term.