The tech-heavy Nasdaq Composite rose 1.29%, remaining in positive territory since the US–Israeli strike on Iran that sparked the current tensions in the Middle East. Gains were driven largely by chipmakers Nvidia and AMD, while Amazon rallied 4% despite issues related to its Middle East data centre operations.
Supporting sentiment, US services activity expanded at its fastest pace since mid-2022, with 14 industries reporting growth and new orders rising to a more than one-year high. Inflation at services providers eased to the lowest level in a year, while order backlogs climbed to a four-year high, indicating underlying resilience in the sector.
Since the beginning of the conflict, the Nifty IT index has remained relatively resilient, falling just 1%, while the 50-share Nifty has plunged nearly 3% over the same period.
Also supporting the sentiment is the Indian Rupee, which slumped 69 paise to an all-time low of 92.18 against the US dollar on Wednesday amid a sharp spike in crude oil prices amid Middle East tensions. A falling rupee is a fundamental positive for Indian IT companies because most of their revenue is earned in foreign currencies, primarily in US dollars, while a large portion of their cost is in rupees.
The resilience also follows deeply oversold conditions after IT stocks witnessed a sharp correction last month. The Nifty IT index tumbled around 20% in February, marking its steepest monthly decline since the global financial crisis in 2008.
The selloff came after Anthropic introduced plug-ins for its Claude Cowork agent, which can automate tasks across functions such as legal, sales, marketing and data analysis, triggering concerns around the impact of AI-led automation on the IT services space.
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