Earnings-driven IT bounce powers Indian shares to best week in six months

Indian stock markets reached their best weekly performance in six months on Friday, buoyed by robust IT sector gains following strong quarterly earnings and a decline in global AI markets, prompting value investments elsewhere. The Nifty 50 index increased by 2.8% to 23,146.15, while the Sensex rose by 3.1% to 74,729.27, marking their strongest weekly performance since April 10. The MSCI’s Asia Pacific index, excluding Japan, experienced a 5.8% decline this week.

Experts attribute the IT sector's rally to positive earnings results and projections of AI-driven revenue growth, which has instilled confidence in investors, leading to a return to beaten-down IT stocks. TCS, Infosys, HCLTech, and Tech Mahindra led the IT index's surge, with their shares gaining between 13.4% and 18.2%, making them among the Nifty 50's top weekly gainers.

The upcoming earnings reports from major banks, ICICI Bank and HDFC Bank, scheduled for release on Saturday, will likely influence the near-term market direction. The record $3.2 billion IPO of Jio Platforms, owned by Reliance Industries, is set to launch on October 21, with trading commencing on October 28. Jio Platforms' competitor, Bharti Airtel, also enjoyed a 5.5% increase this week.

However, analysts remain cautious, highlighting potential challenges such as elevated crude oil prices and the risk of persistent global inflation, which could keep monetary policy tighter for an extended period. Brent crude prices were near $106 a barrel on Friday. Additionally, central bank interventions aimed at curbing dollar demand have strengthened the rupee by approximately 2%, marking the best weekly performance in seven months.