Infosys to Wipro - IT stocks gain up to 3% on FII inflows. Do you own any?

The Indian IT sector stocks Infosys, Wipro, and Tata Consultancy Services surged as much as 3% in Monday's trading session after the Indian Rupee rebounded, which sparked signs of foreign investors returning to domestic markets, boosting overall sentiment.

The Nifty IT index was also up nearly 1.69% or 653.35 points to 39,344.95 on Monday, December 22. According to Anshul Jain, Head of Research at Lakshmishree, Nifty IT is carving out a well-defined 203-day cup and handle structure, with neckline resistance placed near 39,520, marking a decisive make-or-break zone.

“A clean breach and sustained hold above 40,417 would confirm a high-conviction breakout, opening the path toward the all-time high at 46,088, followed by an extended target near 47,500. Trend strength is improving as the handle remains tight and supported, while the top four index constituents are showing clear relative strength,” Jain said.

Wipro share price led the pack by rising 3% to ₹272.22 on December, followed by Infosys shares gaining 2.25% to ₹1,675.60 on Monday.

Infosys stock rose after Infosys' American Depository Receipts (ADRs) rallied sharply to new record levels on Friday, even as the company said it was unaware of any material development behind the sudden surge. The ADRs touched a 52-week high amid aggressive short covering, opening nearly 40% higher before trimming some of the gains.

HCL Tech, Tata Consultancy Services shares also gained as much as 1.5% on Monday.

Why are IT stocks rallying?

Highlighting the reason for rally in IT stocks, Avinash Gorakshkar, a SEBI-registered fundamental equity analyst, said, “The entire Indian stock market is expected to attract FII investment as the Indian National Rupee (INR) has bounced back strongly after hitting a record low of 91.07 last week. The Indian Rupee is expected to gain further after the Bank of Japan's decision on interest rate hikes, and hence the market is expecting more upside from FIIs' buying. We observed FIIs becoming net buyers on Thursday and Friday of last week, driven by the strength of the Indian Rupee. As IT stocks are available at a discounted price, we are also witnessing strong demand for IT stocks.”

The IT stocks soared after data showed that foreign portfolio investors were net buyers of Indian equities worth ₹18.31 billion ($204.42 million) on Friday, lifting their total net purchases to ₹37.76 billion over the past three sessions.

Rupee bounced back from the low of 91.14 to the dollar on 16th December to 89.29 on 19th December.

“This strengthening of the currency also helped to stem the tide of FII selling, too. During the last three trading days FIIs were buyers in the cash market with a total buy figure of ₹3596 crores. With India’s GDP growth improving steadily and corporate earnings growth indicating an uptrend in the coming quarters, FIIs are likely to turn net buyers in 2026,” V K Vijayakumar, Chief Investment Strategist, Geojit Investments Limited

Meanwhile, optimism grew around the prospect of additional interest rate cuts by the US Federal Reserve.

US consumer inflation increased at a slower pace than anticipated over the year ending November. Consumer prices rose 2.7% year-on-year in November, easing from a 3% rise recorded in the 12 months through September.

This cooling in the US Consumer Price Index, as reported by the Labor Department’s Bureau of Labor Statistics on Thursday, has revived expectations that the US Federal Reserve could implement additional interest rate cuts in the near term.

Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.