Nifty IT gains 1.6% on US tech rally, positive Anthropic comments; TCS, HCLTech among top Nifty gainers

Indian IT stocks

• Nifty IT index rebounds 1.6% after a sharp 4.7% fall
• HCL Tech and TCS among top gainers after global tech rally
• Investor sentiment remains cautious amid AI disruption concerns

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Indian IT stocks rebounded on Wednesday after a sharp sell-off in the previous session with the Nifty IT index gaining over 1.5 percent, tracking a recovery in global and US technology shares. However, market participants cautioned that investor sentiment toward the sector remains fragile, with buying interest still limited despite the bounce.

The IT index advanced 1.6% after a 4.7% fall a day earlier. Rapid developments in AI are spurring questions about the long-term outlook for India's IT sector, even as executives frame disruption as an opportunity.

Among the top gainers on the Nifty 50, HCL Tech advanced 2.9% while TCS gained 2%.

The rebound in IT stocks follows a strong overnight rally in global technology shares, with Wall Street benchmarks advancing after weeks of volatility linked to fears over artificial intelligence-led disruption. Sentiment improved after Anthropic said it plans to build partnerships around its Claude technology, easing concerns that its AI tools could displace existing business models rather than integrate with them.

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Despite the recovery, analysts remain cautious on the sector. Speaking on CNBC-TV18, Pratik Gupta, CEO and Co-Head at Kotak Institutional Equities, said US investors have been driving the “AI scare trade” and remain underweight on India, particularly the IT sector. He said that despite the recent correction in IT stocks, investors are staying on the sidelines rather than buying the dip, reflecting a cautious near-term outlook, with local investors following global flows out of the sector.

Gupta warned that a slowdown in IT could weigh on discretionary consumption and lead to higher job losses among US-based IT employees. He added that business models in the IT services sector may need to adapt to AI-driven productivity gains, but stressed that the sector is not “dead”. While near-term visibility remains weak, he said global investors are beginning to reassess their underweight position on India.

The Nifty IT index had fallen over 4 percent on Tuesday, marking one of its steepest single-day declines in recent months, as fears around AI-led disruption triggered a broad-based sell-off across both large-cap and midcap IT stocks.

"While IT companies' valuations have turned attractive after the recent drop, investors will stay cautious because AI's impact on earnings growth and margins remains uncertain," Amnish Aggarwal, director of institutional research at PL Capital told Reuters.

IT shares, which carry roughly an 11% weightage in the blue-chip indexes, the second-highest, have lost 19.7% in February so far.

"There may be an intermittent, technical bounce in IT like in today's session, but it's too early to have a constructive view on the sector," Aggarwal said.

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