IT Index’s Weekly Gain of 11.72% Sets Nifty Over 23,100 on Back of Q2 Earnings Rally
The Indian stock market had a good rally in the week with the Nifty IT index gaining 11.72% for the week which is the best weekly gain since April 2008. The overall sentiments for the investors got improved after strong Q2 earnings from IT majors Tech Mahindra, TCS, Infosys and HCL Technologies.
The Nifty 50 witnessed a rally of 2.78% for the week, while the Nifty Next 50 increased 3.36%. There was a pretty sharp rally in large-cap stocks, while mid-cap and small-cap indices lagged behind in terms of returns.
In addition to the robust IT profitability, sentiment was helped by the improvement in the Indian rupee, moderation in crude prices and a decline in India VIX. However, persistent FII (foreign institutional investor) outflows and surge in wholesale inflation continue to be key worries for the investors.
Nifty IT Index Posts Best Weekly Rise Since 2008
The Nifty IT index led the charge that spurred the rally in Indian stocks. The index kicked off the week at 38,245.30, slipped to a weekly low of 38,120.40 on Monday before going on to make a weekly high of 42,890.55 on Friday. It finally ended the week at 42,730.85. That translates to an over 11.7% weekly rise in just a single week.
The rally was driven by revived interest among investors in Indian IT companies, after quarterly results, as investors cheered revenue growth, healthy deal wins and optimistic outlooks from a host of technology companies.
Tech Mahindra topping the gainers chart with an 18.7% weekly increase. Wipro gained 5.95%, TCS 3.26% and Infosys 4% while the sector received a boost from the better-than-anticipated growth guidance of HCL Technologies.
The rebound comes as a global sell-off in AI stocks prompted some investors to reassess software stocks. Future IT sector returns will be driven by earnings growth, client demand, deal execution and macroeconomic conditions.
Tech Mahindra Leads IT Stocks After Strong Q2 Results
Tech Mahindra was one of the top performers in the Indian stock market following strong second quarter results of FY27.
Company reported quarterly revenue at ₹16,180 crore and new wins were at $1.02 billion, up 25.4% YoY in dollar terms. The net profit in Q2 was reported at ₹1,585.6 crore, up 32.74% YoY.
Additionally, the company declared a 1:1 bonus issue and an interim dividend of ₹15 per share.
The above strengthened investor confidence in the company’s business performance and future growth prospects. The marked rise in deal wins was an indication of the vital role that new client contracts would play in future revenues.
Investors should keep in mind that just because a company posts strong results in the quarter, that doesn’t mean it will enjoy upward mobility in its shares after the fact. Market conditions, future guidance, profit margins and valuations all come into play.
Indian Rupee Rises Against US Dollar
The Indian rupee gained sharply during the week, climbing to nearly ₹94.96 per dollar on Friday from levels near ₹97.
The currency gained about 2% on the week, marking the best week since March 2026.
A stronger rupee can lead to a fall in import costs of foreign goods like crude oil (though it will be contingent on international prices and other factors). Currency movement can also influence IT firms as a large chunk of their revenue comes from international markets.
Meanwhile, Brent oil settled near $105 per barrel compared to $106 a barrel earlier in the week.
While this correction provided some respite to the market, it did little to bring down the still expensive crude. An increase in crude oil prices leads to a larger import bill, crowding out the rupee and stoking inflation.
Gold prices continued to climb as investors looked for more safe-haven assets in the face of concerns about US monetary policy and geopolitical issues.
IMF Increases India’s GDP Growth Prediction to 7%
India’s GDP growth outlook raised to 7% by IMF The IMF boosted India’s GDP growth projections for FY27 and FY28 to 7 per cent, citing buoyant domestic demand and strength of services sector.
The prospects of a conducive macro-economic growth environment underpins corporate earnings, investment and private consumption. But the Inflation outlook will continue to be one of the key factors for the RBI and markets.
Wholesale price index inflation rose to 11.39 per cent in September 2026 from 9.92 per cent in August, as per the market report supplied.
Fuel and power inflation jumped to 25.9% from 22.9% in August. Food articles inflation increased to 8.66% from 7.05%, and manufactured items inflation rose to 9.76% from 8.37%.
An increase in input prices can hit both the margins of businesses and the purchasing power of consumers. If the inflation rate stays high, investors are also likely to shift their view of interest rate expectations and the economic outlook.
The RBI also announced dollar rules for oil marketing firms, forex derivatives and daily cash reserve ratio in banks. The 10-year government bonds yield was at 6.85% level.
Nifty Next 50 Surges, but Stocks in the Mid-Cap and Small-Cap Ranges underperform
The wider market performed consistently different than the larger companies.
The Nifty Next 50 added 3.36% to its weekly gains, better than 2.78% increase in the Nifty 50. Nifty 100 and Nifty 200 added 2.65% and 2.48%, respectively.
The Nifty 500 gained 2.32% suggesting that some major companies had a positive impact on the broad index recovery.
But investors saw lesser gains from mid-cap and small-cap stocks. The BSE 150 Mid-Cap index increased 0.56 per cent and the BSE 250 Small-Cap index added 0.47 per cent. The Nifty Midcap 150 was up 0.62 per cent and the Nifty Smallcap 250 moved up 0.36 per cent.
The market divergence indicates that this rally was not broad-based. Rather it was more concentrated as investor sentiment was selective, as stellar earnings and big tech large-caps led the indices higher.
Broad market participation is a good thing for investors. A rally driven by a small handful of heavyweight stocks may not perform in the same way as one in which its advancing sectors and market capitalisations.
India VIX Falls 4.54% as Market Volatility Cools
Fear indicator India VIX eased 4.54% on weekly basis to end at 14.02.
The index declined 0.61 point, or 4.17 percent, to close at 14.63 from the previous close of 14.63 as it opened at 14.62. Its highest during the day was 14.94 and its lowest was 13.90.
A falling india VIX normally means comparatively lower expected market volatility in the short term. But this does not necessarily imply that share prices will keep trending up or can not experience sudden sharp correction.
The India VIX movement indicated better mood as heavy IT stocks gained ground. Earlier this week volatility rose due to fall in benchmark indices, rising crude oil prices and fear of outflows from foreign investors.
India VIX is not a sufficient indicator so please observe the markets in conjunction with volatility, prices, market breath and trade volumes.
Bank Nifty Flattens, Banking Stocks Show Mixed Performance
Bank Nifty saw a relatively muted week as opposed to the IT index. The banking index saw the level of 55,844 at the end of the week, with a weekly low of 55,210.30 to a weekly high of 56,180.75.
Federal Bank jumped 2.9% after the bank announced its net profit for the second quarter grew 45.1% year-on-year to a record high of ₹1,386 crore.
The banking industry, for instance, did not benefit from this widespread trend as information technology stocks did. Investors were still watching earnings, credit growth, borrowing costs and the economic climate.
Other sectors also delivered mixed performances.