The Nifty IT index jumped 2.8% on Friday, emerging as the best-performing sector in the Indian stock market, which was otherwise under pressure due to weak global cues. This rally was largely fueled by strong Q3FY25 earnings reported by Tata Consultancy Services (TCS), India's largest IT services company.

Key Drivers of the Rally

1. TCS Q3 Performance
   TCS reported a net profit of ₹12,380 crore in Q3FY25, registering a 4% growth from the previous quarter. Its revenue stood at ₹63,973 crore, marginally down by 0.4% quarter-on-quarter. EBIT margins improved by 40 basis points to 24.5%, reflecting better operational efficiency.

   The company also announced a third interim dividend of ₹10 and a special dividend of ₹66 per equity share, underscoring its robust financial health. The dividend record date is January 17, with payment scheduled for February 3.

2. Accenture's Role in Boosting Sentiment
   Market experts believe that Accenture's strong performance last month had already set the stage for positive expectations from Indian IT companies. Accenture's success in driving demand through AI-powered tools has indirectly benefited Indian IT stocks, which share significant exposure to global markets, particularly the US.

   Analysts are now expecting other IT majors like Infosys, Wipro, and HCL Technologies to follow suit with strong Q3 results.

3. Investor Confidence Across Nifty IT
   Following TCS's performance, key stocks like LTIMindtree, Tech Mahindra, Wipro, Infosys, and Persistent Systems also witnessed gains ranging from 1% to 4%. The rally in these stocks reflects strong investor confidence in the IT sector.

Broader Market Context

While the Nifty IT index surged, the broader Indian stock market faced selling pressure, with all other sectoral indices ending in the red. The IT sector stood out as the lone bright spot, highlighting its resilience amid challenging market conditions.

Expert Opinions

Anshul Jain, Head of Research at Lakshmishree Investment and Securities, noted, "After Accenture's better-than-expected results, Indian IT companies were anticipated to deliver strong Q3 numbers. TCS's performance has confirmed this trend, and we expect similar results from other IT majors. This optimism is rooted in the significant business Indian IT companies derive from the US, where Accenture plays a pivotal role."

He added that the adoption of AI-powered solutions by Accenture's clients is expected to sustain demand, which bodes well for Indian IT companies.

Positive Management Commentary

TCS management expressed optimism for higher growth in calendar year 2025 compared to 2024, driven by a revival in discretionary spending. This marked the most positive outlook from TCS in two years, signaling brighter days ahead for the sector.

Implications for Investors

The strong Q3 results from TCS and the positive commentary on future growth have strengthened the case for long-term investments in IT stocks. With the IT sector being a critical driver of India's economy, its resilience amid global challenges adds a layer of stability to portfolios.

In conclusion, the Nifty IT index's robust performance highlights the sector's potential for sustained growth. With strong fundamentals and positive macro trends, Indian IT stocks remain a compelling investment option for the future.

The Upcoming IPOs in this week and coming weeks are  Kabra Jewels and Laxmi Dental.

The Current active IPO are Sat Kartar Shopping and Barflex Polyfilms.