Infosys, TCS, Wipro and other IT stocks in focus after US tech stocks surge despite US-Iran war

Shares of information technology (IT) majors such as Infosys, Tata Consultancy Services and Wipro will focus trade on Thursday, tracking strength in global tech stocks. US markets ended higher overnight, led by megacap technology names, as upbeat economic data outweighed lingering concerns around the ongoing US-Iran conflict, which has entered its sixth day without signs of de-escalation.

The tech-heavy Nasdaq Composite rose 1.29%, remaining in positive territory since the US-Israeli strike on Iran that fueled current tensions in the Middle East. Gains were largely driven by chipmakers Nvidia and AMD, while Amazon rallied 4% despite issues related to its Middle East data center operations.

Supporting sentiment, US services activity expanded at its fastest pace since mid-2022, with 14 industries reporting growth and new orders hitting a more than one-year high. Inflation at service providers hit a one-year low, while order backlog hit a four-year high, indicating the underlying resilience in the sector.

Since the start of the conflict, the Nifty IT index has been relatively resilient, falling just 1%, while the 50-share Nifty has tumbled nearly 3% over the same period.

Also supporting the sentiment is the Indian rupee, which fell 69 paise to an all-time low of 92.18 against the US dollar on Wednesday amid a sharp rise in crude oil prices amid Middle East tensions. A depreciating rupee is a fundamental positive for Indian IT companies as most of their revenue is earned in foreign currencies, mainly US dollars, while a large portion of their cost is denominated in rupees.

Resilience also follows a deeply oversold position after IT stocks witnessed a sharp correction last month. The Nifty IT index tumbled nearly 20% in February, marking the sharpest monthly decline since the global financial crisis in 2008.

The sale came after Anthropic introduced plug-ins for its cloud CoWork Agent, which can automate tasks in functions such as legal, sales, marketing and data analytics, raising concerns around the impact of AI-led automation on the IT services space.

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