Nifty IT index rose nearly 2% on July 3, thus extending its two-day rally to over 6%, as a softer US jobs report eased worries about a near-term interest rate increase by the Federal Reserve and improved risk appetite for emerging markets.
US job growth slowed sharply in June and payroll gains for the prior two months were revised lower, pointing to a cooling labour market and prompting financial markets to dial back expectations for a near-term rate hike.
Lower US interest rates typically support capital flows into emerging markets such as India, while also aiding growth and client spending in the US, a key market for Indian IT companies.
The recovery on Thursday snapped a four-session losing streak during which the index had declined 6.5% amid concerns that the US Federal Reserve could resume interest rate hikes later this year.
At 10:08 am on July 3, Nifty IT index was trading nearly 2% higher at 27,457.45 with HCLTech, Mphasis, Persistent Systems leading the gains by rising 4.26%, 3.19% and 2.87%, respectively.
Still, it remains down 27.6% year-to-date, making it the biggest drag on the Nifty 50, which has fallen about 7% over the same period.
"Since IT stocks were oversold after the recent slump, value buying is also occurring in several frontline technology stocks ahead of first-quarter earnings announcements next week," Ankur Punj, managing director and business head at Equirus Wealth told Reuters.
HCLTech has won a $1.14 billion deal with a major European firm, the software services exporter said on Friday.
The deal will help HCLTech establish an AI-driven operating model to transform and manage the client's global digital workplace and enterprise networks, the company said.
The deal will last for four-and-a-half years, and is extendable by another five years, it added, without providing further details about the European firm.
This is entirely new business for the company, HCLTech said, and not from an existing client or a deal renewal.
HCLTech, which will report its results for the first quarter of fiscal 2027 on July 13, has forecast revenue growth of 1%-4% for the year.
"This large-deal win reinforces HCL Tech's strong positioning in AI-led infrastructure and workplace transformation services, while significantly enhancing long-term revenue visibility through a multiyear annuity contract," ICICI Securities said in a note, reported Informist. The brokerage added that this deal underscores rising enterprise spending on AI-driven operational efficiency, particularly in network and workplace modernisation.