In a remarkable display of resilience, major Indian IT companies including Wipro, Tata Consultancy Services (TCS), and LTI Mindtree posted sharp gains during today's trading session on February 1, 2026, defying the broader sell-off that gripped the Indian stock market. This unexpected rally in technology stocks came as a breath of fresh air for investors who have been navigating volatile market conditions.
IT Heavyweights Lead the Charge
Wipro emerged as the standout performer, with its shares surging an impressive 4.6% to reach the day's high of ₹247.3 per share. The momentum wasn't limited to Wipro alone—LTI Mindtree, TCS, Persistent Systems, Mphasis, and Coforge all recorded substantial gains ranging between 1.5% and 3%. This collective upward movement among key players created a positive ripple effect across the technology sector.
Tracking these gains among heavyweights, the Nifty IT index witnessed a significant jump of 2%, closing at 38,833 points. If this rally maintains its strength through the trading session, the index is poised to snap its two-day losing streak, marking a potential turning point for technology stocks that have faced recent pressure.
Budget Announcements Fuel the Rally
The catalyst behind this sudden rebound in tech stocks can be traced directly to Union Finance Minister Nirmala Sitharaman's Budget 2026 announcements. During her speech on February 1, Sitharaman unveiled a major boost to data centre infrastructure that has immediately resonated with market participants.
The Finance Minister proposed a substantial tax holiday extending until 2047 for foreign companies that provide cloud services globally using data centre infrastructure located within India. This long-term incentive is designed to attract international technology giants to establish and expand their data centre operations in the country. However, there's an important condition: such firms must serve Indian customers through an Indian reseller entity, ensuring local participation in the ecosystem.
Additionally, Sitharaman proposed providing a safe harbour of 15% on cost in cases where the company offering data centre services from India operates as a related entity. This provision offers clarity and protection for multinational corporations considering substantial investments in India's digital infrastructure.
Building India's AI and Digital Foundation
These Budget announcements align perfectly with India's broader strategy to build a robust artificial intelligence computing and semiconductor infrastructure capable of supporting the nation's rapidly expanding digital economy. The government has been systematically working toward this goal, as evidenced by the approval of the IndiaAI Mission in March 2024 with a substantial budget outlay of ₹104 billion.
This ambitious mission aims to create a public artificial intelligence compute infrastructure featuring over 10,000 graphics processing units (GPUs) through public-private partnerships. The combination of these initiatives creates a comprehensive framework for India's technological advancement, with data centres serving as critical physical infrastructure supporting the nation's AI ambitions.
Expert Analysis: Long-Term Implications for IT Sector
Sonam Srivastava, founder and fund manager at Wright Research PMS, provided valuable insights into how these developments translate into market opportunities. According to Srivastava, the government's focus on digital public infrastructure, data platforms, skilling initiatives, and improved compute access significantly expands the addressable market for AI applications across multiple sectors including government services, banking and financial services, healthcare, and manufacturing.
Srivastava identifies two distinct beneficiary groups within the IT sector:
- Large IT services companies such as TCS, Infosys, and HCLTech stand to benefit substantially from rising enterprise AI adoption in areas like automation, advanced analytics, and cloud-led transformation.
- Mid-tier digital engineering firms gain from specialized AI deployment opportunities that require niche expertise and customized solutions.
The expert highlights an even more important second-order effect: data creation. As capital expenditure increases, financial inclusion expands, and formalization of the economy continues, data intensity across all sectors rises dramatically. This creates sustained, long-term demand for AI-driven optimization solutions that can process and derive value from this growing data ecosystem.
According to Srivastava, this positions India strategically as an AI application and services hub rather than merely a frontier model developer. From a market perspective, this translates into steady, compounding earnings opportunities for technology companies rather than speculative spikes, aligning well with the risk profile of listed technology firms that investors typically prefer.
Disclaimer: We advise investors to consult with certified financial experts before making any investment decisions based on market movements or policy announcements.
