Infosys, TCS, Mphasis to Coforge: Indian IT stocks jump up to 4% as global tech stocks rally on Anthropic comments

Indian IT stocks rallied in early trade on Wednesday, recouping some of the heavy losses from previous session, following a rally in global technology stocks. The Nifty IT index gained over 2.8%, emerging the top-performing sector on the NSE.

The gains in IT stocks came amid a rally in the Indian stock market, with the benchmarks Sensex and Nifty 50 rising over half a percent each. Both the indices witnessed a severe crash on Tuesday as artificial intelligence (AI)-led disruption spooked investor sentiment globally.

Mphasis, Infosys, LTIMindtree, HCL Technologies and Tata Consultancy Services (TCS) were the top gainers on the Nifty IT index. All the index constituents rose in the range of 2%-4%.

Indian IT stocks surged following an overnight rally in software and technology stocks on Wall Street. The Nasdaq Composite index ended 236.41 points, or 1.05%, higher at 22,863.68 on Tuesday.

US Tech Stocks Rally

US tech stocks, which had been under pressure since Anthropic launched new AI tools earlier this month, saw a relief rally overnight. The rebound came after Anthropic announced partnerships with several SaaS companies, including Salesforce.

The move signaled that Anthropic plans to work alongside software providers rather than disrupt or replace them — easing one of the main concerns that had triggered the recent sell-off in these stocks.

Salesforce stock price jumped 4.1%, Nvidia stock price rose 0.68%, Advanced Micro Devices (AMD) share price jumped 8.8%, Apple share price rose 2.24%, Microsoft stock gained 1.18%, Intel shares rallied 5.71%, Amazon stock price advanced 1.60%, and Meta shares inched 0.3% higher. Keysight Technologies share price spiked 23.1%.

What is the outlook for Indian IT stocks?

Currently, global IT firms such as Accenture, Cognizant and Capgemini are trading at 14x, 11x and 8x 1 year forward consensus EPS versus TCS and Infosys at 17x. JM Financial believes Indian IT companies have always benefitted from domestic fund flows, which are absent in case of global IT services. Domestic flows have improved significantly post-pandemic, and the valuation gap has become more prominent post-pandemic.

Foreign Institutional Investors (FII) have more investable options than domestic investors. Limited choices and growth visibility in other sectors in the past forced many domestic investors to own Indian IT relative to other Indian sectors.

Additionally, the brokerage firm noted that the depreciation in the Indian rupee also helps Indian IT companies manage margins, unlike global IT giants.

“While we believe INR depreciation benefits are passed to enterprises over the medium term, Indian IT is able to realise some of that benefit in the near term. Valuations remain skewed in the near term, but generally normalise to growth visibility in the medium term. Indian IT sector’s valuation is correlated to sector growth-sector re-rating is unlikely, in our view, till concerns around terminal growth persist,” said JM Financial.

The brokerage firm remains selective and prefers Infosys among the top six companies; Mphasis among mid-tier IT firms, and Sagility among BPO names.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.