Indian IT stocks staged their biggest weekly rally in 18 years, dating back to the days preceding the collapse of Lehman Brothers, as a secular and precipitous fall in AI-related semiconductor stocks elsewhere in Asia boosted battered legacy outsourcing powerhouses with proven revenue streams and decent operating margins.
Better-than-expected September quarter earnings mirroring Accenture's stellar performance and robust future guidance, steady deal flows, and inexpensive valuations after a spell of prolonged correction drew investors back to the sector that is typically over-owned by overseas funds.
ET BureauThe Nifty IT index surged 11.7% during the week, its biggest gain for the period since April 2008, even as semiconductor-heavy Asian markets tumbled amid concerns over the profitability of massive AI investments.
"The rally is being driven by better-than-expected quarterly results, particularly from HCLTech, improving deal prospects and value buying after a prolonged correction," said Ravi Singh, chief research officer at Master Capital Services.
India's IT services sector is also showing signs of stabilisation after nearly two years of cost-cutting and subdued growth. Growth averaged 2-2.5% quarter-on-quarter, while rupee-reported revenue rose 11-15% year-on-year. TCS onboarded 24,000 freshers in the first half of the year, while HCLTech added 6,450 employees during the quarter.
The technology index jumped 3.9% to close at 31,924 on Friday, its highest level since February 22.
To be sure, even after the latest surge, the index has retreated 16% year-to-date. The Nifty gained 2.8% during the week.
Rupee Closes Below 95 for 1st Time in 38 Days
Kolkata: The Indian rupee extended its gain on Friday to close at 94.96 a dollar, below the psychological 95-mark for the first time in 38 days, as the Reserve Bank of India's aggressive measures in defence of the local currency led to a massive reduction in dollar demand. The currency appreciated about 1.9% this week, making it the biggest weekly gain in seven months, traders said.
The rupee opened the day at 94.71, much stronger than the previous close of 95.05, and gained further to 94.67 but corporate dollar demand at lower levels forced it to settle at 94.96 in a shallow market. The unit closed at 96.73 last week very close to the lifetime low 96.96 seen on May 20.
The rupee was seen trading below 95 earlier in the week too but it closed decisively below that level Friday for the first time since September 8, 2026.
"A rebound in risk assets alongside the Reserve Bank of India's aggressive defense strategy provided strong tailwinds for the local currency this week," HDFC Securities senior research analysts Dilip Parmar said in a note.
The forward premiums remained elevated on account of tight liquidity and high bond yields. "There was not much change in rates from yesterday's level," a treasury head with a private bank said.
The trading volume in the forex market remained low as the central bank cracked down on speculative bets and shifted the dollar demand from state-owned oil retailers from the spot market.