IT Stocks Rally Up To 5% In Early Trade As TCS, HCLTech Results And Strong Dollar Lift Nifty IT Index

Information technology (IT) stocks rose sharply in morning trade on Tuesday with the Nifty IT index climbing 3% in intraday deals as investors responded to better-than-expected quarterly results from Tata Consultancy Services (TCS) and HCLTech along with a host of other factors. At 9:54 am, the Nifty IT index was up 3.25%.

TCS, HCLTech, Wipro, Tech Mahindra and Infosys gained up to 5% in early trade during the session. Mphasis, LTM, Coforge, Persistent Systems and Oracle Financial Services Software (OFSS) also traded higher, with each stock rising more than 1%.

The gains lifted the broader IT sector, which has been in focus following the latest earnings updates from major Indian technology companies.

Why Are IT Stocks Rising Today?

Three factors supported the rally in IT shares on Tuesday:

• The latest quarterly earnings from TCS and HCLTech

• A slowdown in the artificial intelligence (AI) trade

• The US dollar's rise against the rupee

Q2 performance from TCS and HCLTech drew attention to the earnings of large Indian IT companies, with investors reacting to the latest numbers. The movement in the dollar also supported the stocks. The dollar index, which tracks the US currency against a basket of six major currencies, hovered near 102.6, its highest level in 18 months.

A stronger dollar matters to Indian IT companies because a significant share of their revenue comes from the US market and is earned in dollars. When the dollar strengthens against the rupee, the rupee value of those overseas earnings rises, supporting reported revenue.

(This is a developing story.)

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