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As bulls roar on D-Street on Monday, the Nifty IT index rallied 6.5 per cent on the NSE — its sharpest intra-day gain since April 7, 2020, when it had surged 8.3 per cent. The index clearly outpaced the broader Nifty 50, which was up 3.5 per cent intraday, making IT the standout sector of the day.

Infosys, LTIMindtree, Coforge, Persistent Systems and Oracle Financial Services Software were the top performers from the pack, soaring between 7 per cent and 8 per cent. Heavyweights like Wipro, HCL Tech, TCS, Tech Mahindra and Mphasis also gained handsomely in the 5–6 per cent range.

The sudden upsurge in Indian IT stocks was sparked by news of a 90-day tariff reduction deal between the US and China. As part of the agreement, the US slashed tariffs on Chinese goods from 145 per cent to 30 per cent, while China reciprocated by cutting tariffs on American imports from 125 per cent to 10 per cent. This easing of global trade tensions has significantly improved sentiment for export-heavy IT firms.

Analysts believe this move improves visibility of global tech spending and suggests possible revival in outsourcing budgets, especially in the US, which accounts for a major chunk of revenues for Indian IT majors.

Adding to the optimism was news of a ceasefire agreement between India and Pakistan, which helped the overall market sentiment. Foreign institutional investors (FIIs), who have been on a buying spree for 16 out of the last 17 sessions, were seen chasing tech stocks again.

On the domestic front, expectations of robust GDP growth in FY26, improving earnings trajectory and softening inflation have further supported bullish undertones across sectors.

Though the Nifty IT index has surged 15 per cent in the past one month, it still remains down 12 per cent year-to-date in 2025. The earlier weakness was driven by US recession fears, delayed decision-making in tech spends, and currency headwinds. However, today's rally suggests a shift in sentiment.

Motilal Oswal Financial Services noted that while Q4FY25 remained muted in terms of discretionary tech demand, margin stability and efficiency gains from SG&A cuts and pyramid optimization may help drive earnings going forward.

While the current rally has given much-needed relief to investors, analysts caution that sustained uptrend depends on actual recovery in client spends and continued geopolitical stability. Key factors to watch include large deal wins, commentary on FY26 budgets, and movement in the US dollar.

Today’s rally marks a potential turning point for Indian IT stocks, which have lagged the broader market for most of the year. With macro tailwinds, cooling global tensions, and signs of client confidence returning, the sector could see renewed interest from both domestic and global investors.

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