Indian IT stocks rally as L&T Technology results and Jefferies outlook lift sector

what happened

Indian IT shares rallied on Wednesday, October 21, with the Nifty IT index climbing as much as 2.6% to an intraday high of 32,348.25, well ahead of the Nifty 50's gain of about 1%. L&T Technology Services led the advance, surging as much as 15% after reporting second-quarter revenue of Rs.3,040.4 crore, up 12.1% year on year, and net income up 66.8% year on year. Wipro gained 4%, while Infosys, TCS, Tech Mahindra and HCL Technologies rose between 2% and 3.5%.

According to Mint, citing a Jefferies note, the brokerage raised price targets for large-cap IT companies by 14-18% while keeping its ratings cautious. It lifted Infosys's target to Rs.1,160 from Rs.1,020 and TCS's to Rs.2,125 from Rs.1,800, and said both could see re-rating if growth holds.

why it matters

The key point for investors is that, per Jefferies, current valuations already price in modest organic growth, so a re-rating depends on companies sustaining revenue rather than a sector-wide rebound. Risks remain from elevated crude prices, high US bond yields, foreign outflows and uncertainty over AI's effect on client spending.

market impact

Indian IT sector: earnings and Jefferies targets support the rally, while AI-spending risks remain

instruments