Nifty IT Index Surges 16% as Investors Pivot to India

The Nifty IT index surged 16% in July 2026, reversing a period of institutional pessimism that saw nine of its ten constituent stocks post negative annual returns. This recovery culminated on July 29, as the BSE Sensex climbed over 800 points and the NSE Nifty rose above 24,200. The rally was fueled by a 2.8% rise in the IT index and net foreign institutional investor purchases of Rs 755 crore on July 28.

Market analysts attribute the rebound to an anti-AI trade reversal, where investors moved away from global AI chip stocks toward undervalued Indian IT services firms such as Infosys, Tata Consultancy Services, HCL Tech, and Tech Mahindra. While some firms like Oracle Financial Services Software and Tech Mahindra saw increased holdings in the June quarter, others remained cautious. HDFC Asset Management Company maintained near-zero allocations due to structural risks from AI-led productivity gains.

Beyond technology, the broader market was supported by HDFC Bank and Hindustan Unilever, as well as Larsen & Toubro, which rose 3.45% following Q1 results and a new order win. The Indian rally occurred despite a spike in Brent crude prices caused by Houthi attacks on Saudi-linked tankers in the Bab al-Mandeb strait, and while other Asian markets, such as South Korea's KOSPI, experienced sharp declines.