The BSE IT index has recorded a 14.4% gain in October 2026, its second-strongest performance in two decades. This rally is driven by a shift in foreign investment toward Indian tech stocks as global volatility in AI-linked equities cools. While companies like Coforge are showing strong order growth, the sector still faces concerns regarding overall demand consistency.
The Indian information technology sector has experienced a strong rally throughout October 2026, with the BSE IT index climbing 14.4% during the month. This performance is the second-best for the sector in the last twenty years, trailing only the growth seen in July 2026 and July 2020. The current move marks a shift in market sentiment, as investors look toward growth potential for the 2027-28 financial year.
FPIs Increase Exposure to Indian Tech
Data from the September quarter shows that foreign portfolio investors have been actively increasing their holdings in major Indian IT firms. Companies such as Tech Mahindra and Oracle Financial Services reported notable stake increases by foreign entities. Other large-cap leaders, including Infosys, HCL Technologies, and Wipro, have also seen rising interest from foreign institutional investors. This influx of capital has provided support to the sector, helping it perform despite broader market volatility. Analysts suggest that as the speculative frenzy surrounding global artificial intelligence investments cools down, long-term capital is returning to growth-focused Indian technology companies.
Coforge Reports Record High After Q2 Earnings
Coforge has been a notable performer during this period, with its stock price hitting a record high of ₹2,049.55. This movement follows the company's recent quarterly earnings report, which showed a 10.9% increase in revenue on a constant currency basis, a metric that removes the impact of exchange rate fluctuations. The company’s executable order book has grown 45% year-on-year to reach $2.4 billion. These results have led to upward revisions in earnings estimates by some brokerage firms, as analysts note that the company’s profit margins currently distinguish it from several of its peers.
Demand Uncertainty Persists
Despite the positive sector momentum, market experts remain cautious about the overall demand environment. While the financial services vertical has shown resilience in recent months, a uniform recovery across all business segments is not yet fully confirmed. The sustainability of the current growth trajectory remains tied to the visibility of order books across the wider industry. For investors, the key monitorable in the coming quarters will be whether companies can maintain this order intake momentum and convert it into stable profit growth, or if macroeconomic factors continue to weigh on client spending decisions.