IT, earnings, tax-cut hopes power Indian shares to monthly gains

Indian shares snapped a two-month losing streak in October, lifted by IT stocks, resilient earnings and hopes of capital-tax relief, though a surge in crude prices due to lingering Middle East tensions capped gains.

On Friday, the benchmark Nifty 50 added 0.51% to 23,053.1, while the Sensex rose 0.42% to 74,459.53. For the month, the indexes advanced 1.9% and 2.7%, respectively.

Nine of the 16 major sectors rose this month, with the IT index jumping 17.7% in its strongest monthly performance in more than six years.

“IT stocks remain near historical averages in terms of valuations, even as visible AI-led revenues begin to validate efficiency gains for Indian software companies,” said Kranthi Bathini, director of equity strategy at Wealthmills Securities.

“At the same time, India remains a hedge for investors looking beyond pure-play AI trades, which is also fuelling bottom fishing in the sector.”

Shares of India’s largest IT firms - Tata Consultancy Services, Infosys, HCLTech and Tech Mahindra climbed between 16% and 22%, topping the list of Nifty 50 percentage gainers.

Jio Platforms, which became the second-biggest company in India by market value, following a blockbuster stock market debut on Wednesday, has risen about 28% since listing. The company is due to report later in the day.

Investors also awaited results from Jio’s parent Reliance Industries. The results could set the near-term tone for the market.

Indian small-caps and mid-caps fell 4.2% and 3.4%, respectively, after scaling record highs in the previous two months.

Among individual stocks, Trent rose 15.1%, supported by steady demand and upbeat quarterly results. Kotak Mahindra Bank rose 10.7% after beating profit estimates, with brokerages identifying faster loan growth and potential margin recovery as key earnings catalysts.

“Overall, September-quarter earnings have not sprung any negative surprise and largely have beaten expectations, and reports that the government may consider cutting LTCG (long term capital gains) tax have added a further tailwind,” Bathini said.

The tax, abolished in 2004, was reintroduced in 2018 at a 10% rate, and was further hiked to 12.5% in 2024.