Shares of India's leading information technology companies witnessed a significant upswing in Monday's trading session, propelled by a rebound in the Indian rupee and signs of renewed interest from foreign institutional investors. This positive momentum boosted overall market sentiment, with key players like Wipro and Infosys leading the charge.
Market Performance and Technical Outlook
Wipro's share price jumped 3% to reach ₹272.22, emerging as the top gainer among its peers. Close behind, Infosys shares advanced 2.25% to ₹1,675.60. This surge followed a sharp rally in Infosys' American Depository Receipts (ADRs) to new record levels on Friday, driven by aggressive short covering, even as the company stated it was unaware of any specific material development behind the move.
Other major IT firms, including Tata Consultancy Services and HCL Tech, also registered gains of up to 1.5%. The broader Nifty IT index climbed nearly 1.69%, or 653.35 points, to settle at 39,344.95 on Monday, December 22.
Providing a technical perspective, Anshul Jain, Head of Research at Lakshmishree, noted that the Nifty IT index is forming a well-defined 203-day cup and handle pattern. He identified a crucial resistance level near 39,520. "A clean breach and sustained hold above 40,417 would confirm a high-conviction breakout, opening the path toward the all-time high at 46,088, followed by an extended target near 47,500," Jain explained. He added that trend strength is improving as the top four index constituents show clear relative strength.
Drivers Behind the Rally: Rupee Strength and FII Flows
Market experts pinpointed the recovery of the Indian rupee as the primary catalyst for the rally in IT stocks. The currency strengthened from a low of 91.14 against the US dollar on December 16 to 89.29 by December 19.
Avinash Gorakshkar, a SEBI-registered fundamental equity analyst, highlighted this connection. "The entire Indian stock market is expected to attract FII investment as the Indian Rupee has bounced back strongly after hitting a record low," he said. Gorakshkar expects the rupee to gain further following the Bank of Japan's interest rate decision, which could lead to more foreign buying. He confirmed that FIIs turned net buyers in the latter part of the previous week, and with IT stocks available at discounted prices, demand for the sector has strengthened.
Data substantiates this trend, showing that foreign portfolio investors were net buyers of Indian equities worth ₹18.31 billion ($204.42 million) on Friday alone. Their total net purchases over the past three sessions reached ₹37.76 billion.
Echoing this view, V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, stated, "This strengthening of the currency also helped to stem the tide of FII selling." He noted that FIIs were buyers in the cash market to the tune of ₹3,596 crores over three days. With improving GDP growth and positive corporate earnings outlook, Vijayakumar anticipates FIIs could turn net buyers in 2026.
Global Factors: US Inflation Data Fuels Optimism
Adding to the positive sentiment were renewed expectations of interest rate cuts by the US Federal Reserve. This optimism stemmed from the latest US consumer inflation data, which showed a slower-than-anticipated increase.
The US Consumer Price Index rose 2.7% year-on-year in November, cooling from the 3% rise recorded for the period ending September. This deceleration, reported by the Labor Department, has revived market hopes that the Fed could implement additional rate cuts in the near term, a scenario typically favorable for growth-oriented sectors like technology.
The combined effect of a stronger domestic currency, returning foreign capital, and a supportive global macroeconomic backdrop created a perfect storm for India's IT stocks to rally, marking a robust start to the week for investors in the sector.
