India’s IT Sector Gains Momentum on Weaker Rupee and AI Push
India’s IT sector is regaining momentum as a weaker rupee, AI-driven contracts, and hopes of US rate cuts boost analyst confidence. Brokerages upgrade outlook.
AI adoption and a weaker rupee are fueling optimism for India’s IT services sector, with brokerages upgrading their outlook.
After experiencing slow growth in recent quarters, India's IT services industry is now experiencing a newfound sense of hope. A weaker rupee, anticipated rate cuts from the US, and an increase in AI-driven projects, according to analysts, could all contribute to a recovery for the nation's leading tech exporters.
The top IT companies in India are seeing a resurgence in investor interest in their shares after experiencing pressure from a lackluster global demand. Even with smaller workforces, analysts think AI could spur new initiatives and help businesses increase revenue per employee.
Brokerages Get IT Right
Nuvama Institutional Equities encouraged investors to increase their portfolios' exposure to IT on September 1st, when it changed its assessment of the IT services industry from underweight to overweight.
As a sign that sentiment toward the industry is improving, Axis Capital and HDFC Securities have also become more upbeat.
The Reasons Analysts Are Upbeat
Weaker Rupee: For IT exporters who receive the majority of their income in US dollars, a falling rupee improves margins.
AI-Led Opportunities: New contracts in automation, cloud migration, and enterprise transformation are being created by the adoption of generative AI.
Global Macro Tailwinds: Expected interest rate reductions in the US could allay recessionary concerns and boost consumer spending on technology.
Prospects
Many analysts view the adoption of AI and currency tailwinds as game changers, but investors are still wary due to geopolitical risks and uneven client demand. India's $250 billion IT services industry may see faster growth in FY26 if global tech spending levels off.
