Indian IT stocks emerged as the strongest-performing sector in October, gaining 18 per cent over the month largely led by weakness in the global AI trade and a more attractive valuation of stocks, as per analysts.
Nifty 50 gained 1.91 per cent in October, while broader market-cap indices declined, as per Motilal Oswal. The IT sector emerged as the strongest-performing sector, gaining 17.69 per centover the month, leading ahead of healthcare and bank services.
Further, brokerage firms like BNP Paribas noted how IT Services companies reported results slightly ahead of estimates for the September-ending quarter. Collectively, 60 per cent of firms beat revenue estimates and 53 per cent beat EBIT margin expectations.
“We expect relative sentiment towards Indian equities among foreign investors to improve, driving portfolio flows in the near term. This is supported by low starting expectations and the correction in AI stocks — the Nifty has outperformed the AI-heavy indices of Korea, Taiwan and the Nasdaq,” said Nomura, adding that a possible LTCG cut for foreign institutional investors, fall in global yields and expectations of the INR holding up on central bank intervention lend further support to the market. The development also comes amidst a global slowdown for IT stocks as the demand for AI appears to cool.
“It’s a sentiment-driven market and valuations have become attractive. Attractive valuations imply they are fairly priced and then investors buy. It’s a reaction of losing streak. The trigger many times is just that stock has become reasonably priced,” said Yugal Joshi, Partner, Everest Group.
The AI impact
However, Greyhound Research argued that the AI trade reversal is just one reason for the renewed interest in Indian IT and a poor guide to how the business is doing. The trend does not explain client activity where, as per the research firm, the business is holding level.
“A rally built on AI stocks falling treats Indian IT as a business that AI hurts. The firms’ own growth case runs the other way, with AI now above a tenth of revenue at TCS and Infosys. A CIO negotiating a 2027 renewal is right to be sceptical of any vendor that reads the October rally as a recovery. The December-quarter results are the next test. If bookings convert into sequential growth above 2 per cent across the four largest firms, the substance will have caught up with the timing,” said Sanchit Vir Gogia, Chief Analyst and Founder at Greyhound Research.
Published on November 9, 2026
