After a long slump, Indian IT shares are finally getting attention again, climbing more than 6% in just one month.
Recent Performance
The Nifty IT index is up over 4% in December, marking three straight months of gains. Almost every stock in the index posted positive returns, with L&T Technology leading the pack at nearly 10% and Infosys, Tech Mahindra and Wipro each rising around 9%.
AI Revenue Visibility Drives Confidence
Clearer guidance on AI‑related earnings is a key driver. Global consulting firm Accenture showed $2.2 billion in new AI bookings for its September‑November quarter, signaling that enterprise AI spending is turning into real revenue. Indian IT firms see this as a preview of what their own AI pipelines could deliver later in the year.
US Demand and Rate‑Cut Influence
The United States, the biggest market for Indian IT services, has shown renewed optimism after the latest interest‑rate cut. Analysts expect a gradual recovery in discretionary tech spending, which should lift deal activity and client budgets.
Remaining Challenges
- Visa restrictions and higher H‑1B fees continue to make it harder to staff U.S. projects.
- Some large transformation projects are still being delayed by global clients.
Four‑Year Journey and Future Outlook
From a 60% surge in 2021 to a 26% drop in 2022, the sector has faced a roller‑coaster ride. In 2025, the Nifty IT index is down more than 10%, the second‑worst performance in a decade.
Nevertheless, most Indian IT firms are now investing heavily in AI across their operations and client solutions. Companies like TCS report AI‑related revenue of about ₹12,500 crore and call AI a “civilizational change.”
Looking ahead to FY27, analysts forecast modest revenue growth of around 4‑5% for the big players, with mid‑size firms potentially growing faster if global confidence improves.
Bottom Line
While challenges remain, the combination of clearer AI revenue prospects, improving U.S. demand, and strong cash flows is reshaping the story for Indian IT stocks. Retail investors may find fresh opportunities, but careful research is still essential.
Remember, this is perspective, not a prediction. Do your own research and consider consulting a certified financial advisor before making any investment decisions.