Tech Mahindra, Wipro, Infosys, TCS jump up to 7%: Why are IT stocks rising today?

IT stocks rallied in early trade on Friday, with Tech Mahindra surging around 7% and Wipro, Infosys and TCS posting strong gains, as better-than-expected quarterly results and expectations of improved deal conversion lifted sentiment.The gains also came as a correction in global AI-linked stocks prompted investors to reassess opportunities in Indian equities.The Nifty IT index rose around 2.8% in morning trade. Tech Mahindra gained 7.11% in the latest snapshot, while Infosys advanced 3.71% and TCS climbed 3.19%. Wipro was up nearly 4% in the supplied market inputs, while HCLTech also traded higher.The rally came even as the broader market showed a mixed trend, with several banking and consumer stocks trading lower. TECH MAHINDRA, WIPRO RESULTS LIFT SENTIMENTTech Mahindra shares rose after the IT services company reported stronger-than-expected second-quarter revenue, helped by robust deal wins. The performance gave investors reason to look beyond concerns over demand and the near-term outlook for technology services companies.Wipro shares climbed nearly 4% after the company reported second-quarter revenue above estimates. Its management also indicated that delayed large deals could support growth in the coming quarters. However, concerns remain over weak deal bookings and a subdued near-term outlook at Wipro. The latest gains suggest investors are responding to the earnings performance and the possibility of an improvement in deal conversion, rather than treating all demand concerns as resolved.Infosys and TCS also advanced, adding to the strength in the IT index. The sector's performance follows a sharp revival in recent sessions, supported by quarterly results and management commentary.GLOBAL AI SELL-OFF ADDS TO INDIA'S IT APPEALThe recovery in Indian IT stocks comes against the backdrop of volatility in global technology shares, as investors reassess valuations linked to artificial intelligence. The weakening of the global AI trade has been one factor behind India's relative outperformance this week, according to market experts.Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said Indian equities had gained 668 points on the Nifty 50 over three days, driven by the weakening AI trade, expectations of possible changes to long-term capital gains taxation in the coming Budget and better-than-expected second-quarter results.He said positive results from major IT companies and management commentary had helped the IT index revive sharply, contributing to the resilience of the Nifty.The broader market had posted its biggest single-day gains in four months in the previous session, following a rebound in the global AI trade and earnings-driven moves. Friday's IT rally has extended that earnings-led momentum, even as other parts of the market face profit booking.CAN THE IT RALLY CONTINUE?Vijayakumar said the positive earnings trend could extend to sectors such as telecom, banking, automobiles and metals, including copper, aluminium and zinc, providing fundamental support to the market.He also pointed to the decline in the US 10-year bond yield and the strength of the rupee as factors that could restrain foreign investor selling. However, he cautioned that foreign institutional investors could continue to sell as long as the US 10-year yield remains above 5% and Brent crude trades above $100 a barrel.He described the current trend as value buying in large-cap stocks, adding that short-covering could accelerate the move.For IT stocks, the next test will be whether strong quarterly results translate into sustained revenue growth and better deal execution. While Tech Mahindra's deal wins and Wipro's revenue performance have supported sentiment, concerns around deal bookings and the near-term outlook remain relevant.The global AI-related sell-off may improve the relative appeal of Indian IT companies, but the sustainability of the rally will depend on earnings delivery, management guidance and the broader demand environment.(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)- Ends