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Informist, Friday, Jul. 31, 2026

MUMBAI – Analysts are divided on the near-term direction of information technology stocks, with some expecting positive momentum around these stocks seen earlier this week to continue after a largely higher-than-expected June quarter earnings and better valuations of select stocks. Meanwhile, some technical analysts expect these stocks to remain under pressure amid continued profit taking after the week's rally. 

Sentiment around domestic IT stocks turned positive this week amid unwinding of the crowded global artificial intelligence stocks. Investors turned cautious over AI stocks globally amid continued AI investment commitments from technology leaders despite no clear near-term pay-off. India is seen as relatively insulated from the global AI-trade due to the lack of pure-play companies in the sector. Even though Indian IT companies have ramped up their involvement in AI, they are still very much away from being pure-play AI firms, giving them a broader AI-defensive play status in the current scenario.

Sentiment around domestic IT stocks was also boosted after the US Federal Reserve decided to keep its repo rate unchanged. Policy decision by the US Fed is closely watched by investors as domestic IT companies earn a major part of their revenue from the US and higher interest rates would impact IT spending by US-based clients and the overall demand environment. 

During the week, the Nifty IT index gained nearly 7%, rising in four out of the five sessions. In July, the index rose around 17%, marking the highest monthly gain since July 2020. On Friday, the sectoral index closed 1.6% lower at 30708.90 points, amid profit-taking after the recent rally, analysts said. Further, robust earnings from Microsoft reignited investor confidence in AI-led growth, fuelling renewed buying across chip-makers and semiconductor stocks. Next week, "mild profit booking could be seen in the index," Osho Krishan, senior Analyst-technical and derivative research at Angel One, said. The index is seen finding immediate support at 29750 points, followed by 29200 points and resistance at 31200-31800 points, he said. 

"Tech stocks are witnessing huge volatility in response to quarterly results, expectations and unprecedented speculative trading. In South Korea, particularly, volatility is excessive...Institutional investors don't like this kind of huge volatility which might impact their performance. This may be one reason why FIIs (foreign institutional investors) have turned buyers in India in recent days," V.K. Vijayakumar, chief investment strategist at Geojit Investments, said in a note.

However, some analysts believe that the recent buying interest by foreign investors in domestic equities may not necessarily mean they are investing in Indian IT stocks. There are still concerns over the earnings growth of these companies, with many retaining their weak guidance for 2026-27 (Apr-Mar) while others trimmed their estimates, they said.  End

TOP HEADLINES

* Intellect Design Arena Apr-Jun consol PAT falls 15% QoQ, sales fall 0.2%
* INTERVIEW: Oct-Mar to fetch better revenues in FY27 - Cyient CFO Kulkarni
* Earnings Outlook: Slowdown seen for Persistent Systems on hi-tech sales lag
* Infosys to modernise Investec banking operations across four markets
* Coforge launches 'Momentuum AI' for its forward deployed engineer model
* Analyst Concall: Zensar Tech margins seen at Q1 levels for couple more qtrs
* Analyst Concall: Hexaware Tech cuts 2026 revenue growth guidance to 6-7%
* Earnings Review: Higher staff, other expenses drag dn Hexaware Tech Q2 PAT
* Earnings Review: Zensar Tech Q1 net down 13% QoQ in line with Street's view
* Earnings Review: Lower raw material cost lifts Honeywell Auto Q1 PAT
* Earnings Review: CarTrade Tech Q1 PAT up 20% YoY on strong rise in sales
* Earnings Outlook: Ramp-up of large deals to drive Hexaware Tech's Q1 sales
* CarTrade Tech, Spinny partner to offer differentiated pricing to customers
* Earnings Outlook: CarTrade Q1 PAT to jump on higher margins, revenue growth
* Analyst Concall: Birlasoft expects margin pressure in Q2 amid wage hikes
* Earnings Review: Birlasoft Q1 consol PAT falls QoQ as tax expenses rise
* Netweb Tech Apr-Jun PAT up 21% QoQ to INR 853 million
* Earnings Review: Pine Labs Q1 PAT jumps four-fold as revenue rises 20% YoY
* Analyst Concall: Coforge eyes record high deals in Q2; retains FY27 targets
* Earnings Review: US deal closings push Coforge to beat sales view
* Earnings Review: Deal closings in US push Coforge to beat Street sales view
* Aurionpro Solutions Apr-Jun consol PAT falls 10.6% YoY to INR 458.63 million
* Earnings Review: Happiest Minds Q1 PAT up 11% QoQ; beats Street estimate
* HCLTech-backed study finds AI confidence high in media and technology sector
* Tata Elxsi in MoU with Kerala institute for AI-led healthcare solutions
* LTM onboards Cognition's Devin for its AI cyber security model BlueVerse
* Earnings Outlook: Birlasoft Q1 PAT seen down on high base; sales tad up
* Earnings Outlook: Happiest Minds Q1 PAT growth to outpace revenue growth
* Cyient appoints Andrew Smith as COO; to replace Prabhakar Atla
 

Following are the resistance and support levels for key IT stocks for next week as per calculations based on their prices on the National Stock Exchange:

End

Reported by Arya S. Biju

Edited by Akul Nishant Akhoury

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