The domestic equity market gave up all its early gains and slipped into the red on Wednesday, October 21, as elevated crude oil prices weighed on investor sentiment. Profit booking in recent outperformers also contributed to the sharp retreat in benchmark indices from the day’s highs. However, one sector that stood tall was IT services. The NIFTY IT index surged as much as 2.88% to the high of 32,422.50 levels, with all 10 constituents trading in the green. The top gainers were Infosys (up 2.44%), Tata Consultancy Services (TCS) – up 2.21%, Wipro – up 3.63%, and Tech Mahindra – up nearly 2%.

Indian IT stocks have found favour with investors amid encouraging Q2 FY27 earnings, healthy deal wins and optimistic management commentary from companies such as TCS, HCLTech and Wipro, as well as peers including Tata Elxsi and L&T Technology Services (LTTS). Strategic partnerships with global technology leaders such as Nvidia, Anthropic and Google have also strengthened expectations that Indian IT companies could benefit from rising enterprise AI adoption. Another factor supporting the sector is the rotation away from global AI‑linked stocks amid concerns over elevated valuations and the sustainability of AI‑led growth, making Indian IT services stocks appear relatively attractive after a prolonged correction.

However, Helios Capital’s Samir Arora has cautioned against celebrating declines in AI stocks or positioning India as an “anti‑AI trade”, warning that a fall in US equities could also hurt Indian markets. According to a report by Moneycontrol, the expert argued that cheaper AI models and intensifying competition could weigh on AI stock prices without signalling a slowdown in the technology itself. Arora also said India’s two‑year period of market underperformance could be nearing an end and called for zero equity taxation for foreign portfolio investors (FPIs) to make Indian markets more competitive.

IT stocks are in the spotlight also because IT services giant Infosys is slated to report its numbers this week. The IT major is scheduled to announce its September quarter (Q2 FY27) earnings on Friday, October 23. Investors will track revenue growth, deal wins, the demand outlook, management commentary on discretionary spending, and the company’s guidance for the remainder of FY27 amid continued focus on AI‑led opportunities and global technology spending.

Infosys’ AI services, which accounted for over 8% of its revenue last quarter and are growing at a double‑digit rate sequentially, are likely to drive almost half of its work in two to three years, CEO and MD Salil Parekh said on Tuesday. Parekh said the business, which includes building AI agents, coding work and modernising old technology for clients, is small relative to the company’s size but growing so fast that it could account for 20‑30% of Infosys’ work within a few quarters if the current pace continues.

With inputs from PTI, the article notes that the report is purely informational and not investment advice. Investors are advised to consult a financial advisor before making any investment decisions. The rally in IT stocks reflects a combination of strong earnings, deal activity, strategic alliances and a shift in investor focus away from high‑valuation AI‑linked global equities. The sector’s performance on October 21, 2026, underscored by a 2.88% rise in the NIFTY IT index, highlights the resilience of Indian IT services amid broader market volatility.