The rally was supported by firm global cues, easing crude oil prices, and improving investor sentiment.
Firstsource Solutions led the pack, surging 14% — its biggest single-day gain since December 2020. Coforge rose 4%, while Mphasis advanced 2% during the session.
Notably, none of the mid-cap IT firms have reported their fourth-quarter earnings yet.
Among large-caps, TCS recently posted in-line results, while Wipro has announced a board meeting on April 16 to consider its quarterly earnings along with a potential share buyback — its first in nearly three years.
The IT sector had come under pressure in February amid concerns around AI-driven disruption, particularly following developments by US-based Anthropic. Stocks had declined 15-20% during the month before witnessing a recovery in recent sessions.
The Nifty IT index has rebounded 8% since April, although it still remains down 23% over the past one year.
The recent recovery appears to be driven largely by positioning and attractive valuations.
According to BNP Paribas, the underperformance of Nifty IT relative to the Nasdaq had approached historical lows in March 2026.
Ownership trends also indicate room for a rebound. Foreign institutional investor exposure to IT services has fallen to near all-time lows of around 6% as of March 2026, while domestic institutional ownership has dropped sharply to 6.6% from 14% earlier.
Valuations remain below historical averages. TCS is currently trading at 15-15.5x its estimated FY28 earnings, compared to 20-22x in the pre-Covid period and peaks of 30-32x post-Covid.
Infosys is valued at around 16.5x, versus 18-20x pre-Covid and 28-30x at post-Covid highs.
While near-term factors such as currency tailwinds and positioning are aiding the rebound, uncertainty around global demand and technology spending continues to weigh on the sector.
