{"id":2736,"date":"2026-10-17T08:33:47","date_gmt":"2026-10-17T08:33:47","guid":{"rendered":"https:\/\/newsraise.com\/in\/2026\/10\/17\/indian-it-index-rebounds-ai-sentiment-shift\/"},"modified":"2026-10-17T08:33:47","modified_gmt":"2026-10-17T08:33:47","slug":"indian-it-index-rebounds-ai-sentiment-shift","status":"publish","type":"post","link":"https:\/\/newsraise.com\/in\/2026\/10\/17\/indian-it-index-rebounds-ai-sentiment-shift\/","title":{"rendered":"Indian IT Index Rebounds Over 16% as AI Sentiment Shifts"},"content":{"rendered":"\n<!-- Quick Adsense WordPress Plugin: http:\/\/quickadsense.com\/ -->\n<div class=\"9fece8afa224fd09e54b043d0febfb58\" data-index=\"1\" style=\"float: none; margin:10px 0 10px 0; text-align:center;\">\n<script async src=\"https:\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\"><\/script>\r\n<!-- NR ATF -->\r\n<ins class=\"adsbygoogle\"\r\n     style=\"display:block\"\r\n     data-ad-client=\"ca-pub-8898941184964366\"\r\n     data-ad-slot=\"4839033563\"\r\n     data-ad-format=\"auto\"\r\n     data-full-width-responsive=\"true\"><\/ins>\r\n<script>\r\n     (adsbygoogle = window.adsbygoogle || []).push({});\r\n<\/script>\n<\/div>\n<p>India\u2019s information\u2011technology (IT) index posted a dramatic rebound this week, with Tech Mahindra posting the biggest jump of more than 16% and Wipro gaining 13%. Tata Consultancy Services (TCS), Infosys and HCL Technologies each added roughly 12% to their share prices. The surge follows a period earlier in the year when foreign institutional investors and other market participants withdrew from the sector as AI\u2011linked stocks captured attention amid concerns about slowing demand and earnings.<\/p>\n<h2>Factors that turned the tide<\/h2>\n<p>The rally can be traced to four inter\u2011related developments. First, the broader AI market experienced a sharp correction. U.S. stocks tied to artificial\u2011intelligence themes fell on Thursday, extending a global sell\u2011off that has erased more than $1\u202ftrillion in market value from 20 of the world\u2019s most valuable AI and semiconductor companies this week. Analysts cited worries about rising interest rates, tighter AI financing and intensifying competition as the primary drivers of the pull\u2011back.<\/p>\n<p>Adding to the pressure, OpenAI revised its revenue outlook for September. The company told investors that its annualised revenue for the month was \u201cnearly $50\u202fbillion,\u201d a figure notably lower than the earlier guidance that suggested a run\u2011rate approaching $70\u202fbillion. The downgrade, reported by Reuters, underscored the volatility in expectations around AI\u2011driven growth.<\/p>\n<p>Second, Indian IT firms delivered earnings that exceeded market expectations. TCS, the country\u2019s largest IT services player, reported a 15% year\u2011on\u2011year increase in consolidated net profit, rising to Rs\u202f13,884\u202fcrore for the second quarter compared with Rs\u202f12,075\u202fcrore a year earlier. The board also announced a second interim dividend of Rs\u202f12 per share for the financial year 2026\u201127, reinforcing confidence among shareholders.<\/p>\n<p>Third, global consulting giant Accenture offered a reassuring outlook at its recent investor day. Chief Executive Officer Julie Sweet emphasized that new technologies, including AI, are not expected to pose a major threat to the consulting business, aiming to allay fears of sector\u2011wide disruption.<\/p>\n<p>Finally, concerns about the cost of capital for AI projects surfaced this week. Broadcom\u2019s chief executive Hock Tan warned that financing constraints could become a bigger bottleneck for AI expansion than traditional shortages of semiconductors, memory chips or electricity. Intel\u2019s CEO Lip\u2011Bu Tan echoed the sentiment, noting that rising capital costs require companies heavily investing in AI to demonstrate clear returns.<\/p>\n<h2>Analyst perspectives on the recovery<\/h2>\n<p>Market participants have interpreted the combination of stronger earnings and a softening AI hype as a catalyst for the IT index\u2019s bounce. VK Vijayakumar, chief investment strategist at Geojit Investments, said that \u201cstrong results from major IT companies and positive management commentary had triggered a sharp recovery in the IT index, helping the Nifty remain resilient.\u201d He added that the improvement could provide \u201cfundamental support to the broader market.\u201d<\/p>\n<p>Axis Securities, while noting the upside, remains cautious. The firm highlighted that \u201cthe pace of global AI adoption over the next 2\u20113 years remains a key concern for earnings growth and valuations\u201d for the Indian IT sector.<\/p>\n<p>Krishna Sanghavi, chief investment officer for equity at Mahindra Manulife Mutual Fund, warned that \u201cif questions arise globally around the commercial viability of AI, potentially slowing its rollout, market concerns over Indian IT companies could ease.\u201d<\/p>\n<p>Gaurav Garg, head of research at Lemonn Market desk, offered a balanced view: \u201cThe sector may remain positive in the near term, supported by improving sentiment and buying interest following HCLTech\u2019s results, but after a sharp rally, some profit\u2011booking and volatility cannot be ruled out.\u201d<\/p>\n<p>Outside India, the AI\u2011related sell\u2011off also impacted other markets. South Korea\u2019s technology\u2011heavy index fell more than 6% on Tuesday as the decline in AI\u2011linked equities deepened, illustrating the global reach of the correction.<\/p>\n<h2>Outlook and potential risks<\/h2>\n<p>While the recent surge has restored optimism, analysts caution that the sector\u2019s trajectory will hinge on several variables. The sustainability of AI\u2011driven investment, the ability of firms to translate heavy spending into profitable outcomes, and the broader macro\u2011economic environment\u2014including interest\u2011rate dynamics\u2014remain central to future performance.<\/p>\n<p>Investors will be watching upcoming earnings releases and any further guidance from major players such as Accenture, Broadcom and Intel. A continued easing of AI\u2011related valuation pressures could reinforce the current positive sentiment, whereas renewed doubts about AI\u2019s commercial viability might reignite the outflows that plagued the sector earlier in the year.<\/p>\n<p>In the short term, the IT index\u2019s recent gains appear to have provided a cushion for the broader Indian market, with the Nifty index showing resilience amid the volatility. Whether this resilience can be maintained will depend on how quickly the sector can navigate the twin challenges of capital intensity and competitive pressure while delivering consistent earnings growth.<\/p>\n\n<div style=\"font-size: 0px; height: 0px; line-height: 0px; margin: 0; padding: 0; clear: both;\"><\/div>","protected":false},"excerpt":{"rendered":"<p>Tech Mahindra, Wipro and other Indian IT firms surged more than 12% this week, reversing earlier outflows amid a global AI sell\u2011off and stronger quarterly results.<\/p>\n","protected":false},"author":3,"featured_media":2737,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[299],"tags":[3024,3026,2033,2817,3025],"class_list":["post-2736","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-ai-market","tag-global-tech-rally","tag-indian-equities","tag-it-stocks","tag-quarterly-earnings","entry"],"_links":{"self":[{"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/posts\/2736","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/comments?post=2736"}],"version-history":[{"count":0,"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/posts\/2736\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/media\/2737"}],"wp:attachment":[{"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/media?parent=2736"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/categories?post=2736"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/tags?post=2736"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}