NIFTY IT Index Traded Marginally Lower at Midday, Halting Intraday Gains Despite Sharp Monthly Recovery

The NIFTY IT index was trading marginally lower at 32,027, down 54 points or 0.17 per cent, by midday on Friday. Seven of the ten index constituents traded in the red, despite the sector recording a strong one-month recovery of over 13 per cent. During the session, the IT gauge swung between an intraday low of 31,144 and a high of 33,138, reflecting volatile market sentiment ahead of the upcoming quarterly results season.

Among individual stocks, Tata Consultancy Services (TCS) led the pack with a gain of 1.16 per cent to ₹2,536. Infosys added 0.21 per cent to ₹1,155, while HCL Tech remained nearly flat. On the losing side, OFSS fell 2.40 per cent, LTM shed 2.32 per cent, and Tech Mahindra dropped 1.38 per cent. Overall, the market breadth for the index showed three advancers against seven decliners.

Performance metrics indicate a mixed trajectory for the sector. The index reported a three-month return of 12.24 per cent and a monthly return of 13.03 per cent, signaling a recovery from a prolonged downturn. However, a year-to-date (YTD) loss of 16.10 per cent and a one-year decline of 11.23 per cent highlight that the sector remains significantly below its 52-week high of 40,301.

Ahead of these results, HDFC Securities released its Q2FY27 results preview, projecting a muted quarter for Indian IT. The brokerage estimated tier-1 quarter-on-quarter constant-currency growth to range between -0.4 per cent and +2.0 per cent. It highlighted persistent headwinds such as soft deal wins, cautious client decision-making, and AI-led pricing pressure. At the same time, the preview noted that valuations remain near historical lows, with the sector's one-year forward price-to-earnings (P/E) ratio at 16.5x compared to a 10-year average of 21.8x. The National Stock Exchange (NSE) currently lists the index P/E at 19.85x.

In terms of brokerage ratings, HDFC Securities maintained a 'BUY' rating on Infosys with a target price of ₹1,250, while favoring Persistent Systems and Mphasis in the mid-cap segment. Additionally, the brokerage downgraded Birlasoft to 'ADD' and upgraded Cyient to 'BUY'.

"The recent movement in the NIFTY IT index highlights the delicate balance between short-term technical recoveries and broader macroeconomic realities. While a 13 percent monthly recovery demonstrates resilience, the cautious client spending and AI-led pricing pressures flagged by brokerages indicate that IT companies must continue to adapt their business models. Investors should watch tier-1 quarter-on-quarter growth closely as the results season unfolds, keeping a long-term perspective on valuations that are currently tracking below historical averages." — Dr. Shishir Gupta, Founder & CEO, StartupLanes