Indian IT stocks surge up to 15% as Jefferies highlights sector re-rating

Indian information technology shares rallied strongly on Wednesday, outperforming the broader market following robust quarterly results from engineering services firm L&T Technology Services and an upbeat valuation assessment from Jefferies.

The benchmark Nifty IT index rose as much as 2.6% to an intraday peak of 32,348.25, easily outpacing the headline Nifty 50 index, which added around 1%. Every constituent on the IT gauge traded in green territory, reflecting resilient institutional demand across the country's software export sector.

L&T Technology Services led the surge, jumping as much as 15% after its September quarter figures demonstrated steady enterprise demand. Wipro climbed 4%, while heavyweight exporters including Tata Consultancy Services, Infosys, HCL Technologies, Tech Mahindra, and Mphasis each gained between 2% and 3.5%. Mid-tier peers Persistent Systems, Coforge, and LTIMindtree advanced by more than 1%.

Strong operational delivery lifts sentiment

The broad-based advance followed an encouraging start to the second-quarter earnings season, where bellwethers TCS and HCL Technologies had already posted results ahead of street expectations. Technology providers have maintained business momentum despite global macroeconomic uncertainty and discussions around artificial intelligence spending.

L&T Technology Services provided the session's immediate catalyst. The company reported a 3.4% sequential rise and a 12.1% year-on-year increase in second-quarter revenue to ₹3,040.4 crore, while net income surged 53.7% quarter-on-quarter to ₹548.2 crore. In constant currency terms, dollar revenue rose 2.7% sequentially to $317 million.

Jefferies flags valuation recovery

Investor confidence was further supported by a research note from global brokerage Jefferies, which argued that Indian software companies have absorbed the impact of lower global growth expectations and are positioned for valuation re-rating.

Jefferies noted that domestic software exporters continue to deliver organic revenue growth despite softer overseas corporate spending. That resilience has encouraged investors to reconsider terminal growth assumptions. The brokerage raised price targets across large-cap technology firms by 14% to 18%, identifying Infosys and TCS as the only large caps offering re-rating potential exceeding 20% under an optimistic case.

For Infosys, Jefferies raised its target price to ₹1,160 from ₹1,020 while retaining a 'Hold' rating. For TCS, it lifted its target price to ₹2,125 from ₹1,800 while maintaining an 'Underperform' rating. In the mid-cap segment, Jefferies picked Sagility as offering the strongest upside, pointing to a possible re-rating potential beyond 50%.

The brokerage observed that current valuations imply conservative organic growth of 0% to 9% for large caps and 6% to 14% for mid-caps, roughly two to four percentage points below historical rates. With corporate balance sheets sound and execution steady across critical enterprise software deals, domestic technology providers are demonstrating the fundamental strength underpinning India's corporate sector.