Nifty IT soars 2% as Bernstein upbeat on outlook, sees earnings revival on strong deal activity

Bernstein retained its 'outperform' rating on KPIT Technologies, but cut its target price.

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26 Aug, 2025 12:21

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Information and technology stocks rallied sharply in trade on Friday, May 23, after international brokerage Bernstein announced that the domestic IT sector might be poised for a sharp pick-up, amid a stable demand outlook  and rising deal activity.

In the large-cap space, Bernstein picked IT giant Infosys on its marginal stability in large-caps. In the SMIDs space, the brokerage picked Coforge and Persistent Systems as its top choices, to bank on the fastest growth.

The broking house added that the information technology space is likely to see improved earnings in the current fiscal year, as compared to FY2025, and the rising guidance will likely lead to improved revenue in FY2027.

Further, large IT players have noted that their business outlook remains relatively stable, and their clients do not expect demand to fall suddenly. On the AI-front, adoption of artificial intelligence has shown positive results. The financial segment of IT players is showing the strongest momentum, as a result of their higher budgets.

Deal activity, too, is on the rise. In the March quarter of FY25, large-cap firms reported a total contract value of $21.9 billion, led by TCS, Infosys, and HCL Technologies.

At 10.25 am, the Nifty IT was the top sectoral gainer, jumping 1.8 percent to 37,711.40. All the index constituents traded with gains, rallying between 1.5 to three percent. Oracle Financial Services Software, Coforge, and Persistent Systems led the gains.

The brokerage maintained an 'outperform' rating on IT services players, such as Infosys, Tata Consultancy Services, Tech Mahindra, and Coforge, while also bumping their target prices.

Infosys' target was been raised to Rs 1,760 from Rs 1,680, TCS to Rs 3,910 from Rs 3,740, Tech Mahindra to Rs 1,680 from Rs 1,480, and Coforge to Rs 9,530 from Rs 8,630.

Bernstein also retained its 'outperform' rating on KPIT Technologies, although its target was slightly reduced to Rs 1,390 from Rs 1,400. Meanwhile, L&T Technology Services was kept at 'underperform' with its target price cut to Rs 3,990 from Rs 4,150.