HCLTech, Infosys, TCS: NIFTY IT index rises 3% on Wednesday, February 25; what is behind the recovery?

How individual names are faring

When last checked, HCL Technologies was trading over 3% higher, while Infosys was up nearly 3%. Tata Consultancy Services (TCS) shares were trading 2.5% higher at ₹2,637.20 apiece on the NSE, while Wipro was up 2.18% at ₹204.50.

Why IT stocks are in the green today

The rally could be attributed to factors such as a rise in global software stocks in the US market and industry leaders' statements on the recent brutal sell-off in the Indian IT stocks.

Wall Street update

US equities rose on Tuesday, led by gains in Advanced Micro Devices and software stocks, as investors’ fears around artificial intelligence disruption to certain industries eased.

The S&P 500 advanced 0.77% to close at 6,890.07, while the Nasdaq Composite rose 1.04% and settled at 22,863.68. The Dow Jones Industrial Average added 370.44 points, or 0.76%, and ended at 49,174.50. IBM shares, which tumbled in the prior trading day as a result of AI fears, also added to the Dow’s gains.

Shares of AMD jumped 8.8% after Meta Platforms announced a multiyear deal with the semiconductor company.

The new partnership entails deploying up to 6 gigawatts of AMD’s graphics processing units for AI data centres.

What industry leaders said on the sell-off in IT stocks

The street's reaction to the Indian IT sector stocks is "overblown", HCLTech CEO and MD C. Vijayakumar said at the Nasscom Technology & Leadership Forum (NTLF) on February 24 in Mumbai.

The information technology (IT) industry is undergoing a “painful” AI transition, but it will emerge more relevant as the current inflection will make the sector significantly “reinvent” itself, the CEO added, according to a report by Moneycontrol.

Vijayakumar’s comments come at a time when the stock rout is driven by fresh fears of AI-led disruption following claims of Anthropic that its Claude Code tools would sharply reduce the cost and complexity of modernising legacy software systems.

Short Covering

Another factor, pointed out by analysts, is short covering. Short covering happens when traders who had earlier bet on IT stocks falling (by short-selling them) start buying those same stocks to close their positions.

So, short covering in IT stocks means traders who had bet on further downside are buying back shares to exit, which can trigger a sharp but sometimes temporary rebound.