IT Stocks Rally Today

Indian IT stocks rose 15% today with L&T Technology Services leading the rally after strong Q2 results.

“IT stocks witnessed strong buying on wednesday, october 21, with l&t technology services leading the rally after reporting robust second-quarter results”

Nifty IT Index Climbs

The Nifty IT index rose 2.6% to 32,348.25, outperforming the Nifty 50 which gained 1%.

Top Performers

L&T Technology surged 15%, Wipro advanced 4%, and Infosys, TCS, Tech Mahindra gained 2-3.5%.

Q2 Earnings Strength

L&T Technology reported higher revenue and profitability with Q2FY27 revenue up 3.4% QoQ and 12.1% YoY.

“The company's q2fy27 revenue increased 3.4% quarter-on-quarter (qoq) and 12.1% year-on-year (yoy) to ₹ 3,040.4 crore”

Jefferies Bullish Outlook

Jefferies sees re-rating potential for Infosys and TCS but warns AI-related risks could delay recovery.

“With it firms still delivering growth despite weak macro and ai-deflation, investors are more willing to revisit their terminal growth assumptions”

Target Price Adjustments

Jefferies raised Infosys target to ₹1,160 from ₹1,020 and TCS target to ₹2,125 from ₹1,800.

“For infy, jefferies retained its 'hold' rating but increased its target price to ₹ 1,160 from ₹ 1,020”

Re-rating Potential

Jefferies estimates 20% re-rating potential for Infosys and TCS under optimistic scenarios.

“Under the optimistic scenario, jefferies sees more than twenty percent re-rating potential for infy and t. c s among large-cap it companies”

Growth Expectations

IT stocks price in 0-9% revenue growth for large-caps versus 6-14% for mid-caps, below historical levels.

“Large-cap it companies are pricing in constant-currency revenue growth of 0-9% on a compound annual growth rate (cagr) basis”

Risks to Recovery

Elevated crude oil prices, high US bond yields and AI-driven client spending uncertainty threaten IT stocks.

“Elevated crude oil prices, high us bond yields and continued foreign investor outflows remain concerns for the broader market”

Jefferies Caution

Jefferies warns IT sector recovery depends on individual companies sustaining growth, not broad-based recovery.

“Any re-rating, therefore, is likely to depend on individual companies' ability to sustain revenue growth, deliver earnings and justify higher valuation multiples”