Infosys, TechM, LTM: IT stocks erase gains after rallying in early trade; fresh updates to know

The NIFTY IT index has surged for three straight sessions from Friday, May 15, to Tuesday, May 19.

The NIFTY IT index on Wednesday, in the early trade, advanced as much as 0.65% to hit the high of 29,500.70 levels. When last seen, eight out of ten constituents were trading in the green.

However, when last seen, the IT sector index traded 0.16% lower.

The buying interest in battered IT stocks continued amid Cognizant increasing its 2026 share repurchase target by $1 billion to $2 billion.

In its press release, Cognizant, a leading AI builder and technology services provider, on May 18, announced that its board of directors has authorised a $2 billion increase to its existing share repurchase program, and that it has increased its share repurchase target for 2026 to $2 billion, an increase of $1 billion over its prior expectation.

The additional $1 billion in share repurchases is expected to be completed during the second quarter of 2026.

"Our plan to increase the amount of share repurchases reflects our strong conviction in the long-term opportunity AI creates and our critical role in it as an AI builder," said Ravi Kumar S, CEO.

"We believe a fundamental shift in the IT services is underway, one that strengthens Cognizant's position for future growth. We believe our current share price significantly undervalues those prospects. I am confident that our early investments will position us to emerge as a leader in AI-led enterprise transformation in the years ahead,” the CEO added.

"A strong balance sheet and robust free cash flow give us the flexibility to opportunistically accelerate the return of capital to shareholders while we continue to invest for growth, including through strategic M&A," said Jatin Dalal, Chief Financial Officer.

Return of capital to shareholders

On May 17, 2026, the Board of Directors approved an increase of $2 billion to the amount authorised under the company's existing stock repurchase program.

With this increase, as of May 17, 2026, there is approximately $3.45 billion remaining under the share repurchase authorisation. For 2026, the Company is increasing its share repurchase expectation by $1 billion to $2 billion.

“In connection with this plan and given the anticipated closing of our previously announced acquisition of Astreya, the company will draw down $1 billion from its existing revolving credit facility. The company reiterates its long-term capital allocation framework, including the flexibility to pursue strategic acquisitions,” the press release added.

Why is there a turnaround in IT stocks after a massive fall?

Indian IT stocks have been witnessing strong buying interest lately, driven by a combination of factors including the decline in the rupee, easing concerns around AI disruption, and value buying after the recent sharp correction in the sector.

A weaker rupee is positive for export-focused IT firms as it boosts rupee realisations from dollar revenue. At the same time, investors are increasingly realising that fears around artificial intelligence disrupting Indian IT may have been overstated, as companies such as Infosys, Tata Consultancy Services, HCL Technologies, and Wipro are aggressively investing in AI capabilities, partnerships, and AI-led services.

The recent correction in IT stocks had also made valuations attractive, prompting bargain buying and short covering in the sector.