Tech Stocks Rally: Nifty IT Index Jumps 2% as US-China Talks, Stable Dollar, and FII Interest Boost Sentiment

The Indian technology sector is experiencing a strong upswing today. The Nifty IT Index has risen by 2%, with nearly all of its constituents trading in the green. This continues a positive trend over the past five trading sessions, during which the index has climbed 4.7%.

Leading the rally are stocks like Coforge, Persistent Systems, Tech Mahindra, and Oracle Financial Services.

• Coforge share price surged 5.6% during intra-day trade to hit ₹1,895 on the NSE.
• Persistent Systems share price climbed 3.2% to ₹5,980.
• Tech Mahindra share price moved up 2.5% to ₹1,619.

All index components contributed to the gain, reflecting broad-based optimism in the sector. While the index is still down nearly 10% for 2025 due to earlier concerns over Trump-era tariffs and a weakening dollar, today’s rally highlights renewed investor confidence.

Why Are Tech Stocks Rising Today?

The spike in IT stocks is being driven by several macroeconomic and market-specific developments. Here are three major factors behind today’s surge:

1. US-China Trade Talks Resume

One of the key drivers of today’s rally is the revival of trade negotiations between the US and China. Meetings in London mark a renewed attempt by the two largest global economies to resolve long-standing trade and diplomatic tensions.

Discussions are expected to cover critical issues like restrictions on rare earth exports, visa regulations for Chinese students, and broader trade frameworks.

This comes on the heels of a recent phone call between US President Donald Trump and Chinese President Xi Jinping, which laid the groundwork for potential agreements. In addition, a temporary truce reached in Geneva last month suspended mutual tariffs for 90 days, giving markets a reason to be optimistic.

2. Stability in the US Dollar and Encouraging Economic Signals

Another major support for tech stocks is the current stability in the US dollar. A stable dollar is favourable for Indian IT companies, which earn a large share of their revenues in foreign currencies.

Market participants are also taking note of encouraging signs from the US economy. Improvements in employment figures and cautious optimism around trade deals have helped reduce uncertainty.

The dollar is expected to remain range-bound until the outcome of the US-China talks is clear. This has provided short-term relief to IT exporters and boosted investor confidence in the sector.

3. Continued FII Interest in the IT Sector

According to reports, the top 5 sectors by FII holding are:

• Banking, Financial Services & Insurance (BFSI)
• Information Technology (IT)
• Oil & Gas
• Automobiles
• Pharmaceuticals

Together, these sectors account for 60% of FII equity investments in India.

FII ownership in IT services alone stands at 8.2%. Although there was some net selling of IT stocks by FIIs in May 2025, the amount was far lower than in April. This trend indicates that FIIs are becoming more selective and cautious rather than pulling out entirely from the sector.

Investors see this as a sign of stabilisation and long-term confidence in India’s tech story.

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Nifty IT: A Look at 2025 Performance

While the Nifty IT Index has seen a notable 4.7% jump in the past 5 trading sessions and is up 2% today, the overall performance in 2025 has been mixed.

So far this year, the index is still down nearly 10%. The decline is largely attributed to fears over renewed US tariff policies, especially under Trump’s trade agenda, and volatility in the global currency markets.

Today’s rally, however, suggests that investor sentiment may be shifting in a more positive direction.

Conclusion

The rally in tech stocks is fueled by a mix of improving global trade relations, favourable currency conditions, and sustained institutional investor interest. As the US and China resume dialogue and the dollar holds steady, Indian IT firms are poised to benefit.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

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