HCLTechnologies shares extend gains, climb nearly 8%: Two factors behind today's rise

Shares of HCLTechnologies Ltd extended their recovery for a second consecutive session on Friday, climbing 7.59 per cent to touch a high of Rs 1,159.25. The stock was last trading 5.92 per cent higher at Rs 1,141.30. Despite the recent rebound, it remains down 30.21 per cent on a year-to-date (YTD) basis.

The upmove appears to be driven by two key factors. First, IT stocks witnessed a rebound after a sharp selloff triggered by concerns over the impact of artificial intelligence (AI). Second, the company announced a significant strategic partnership with a Europe-headquartered Fortune Global 50 company in a deal valued at $1.14 billion.

"HCLTech is pleased to announce the signing of a significant strategic partnership with a Europe-headquartered, Fortune Global 50 Firm to establish an AI-driven operating model to transform and manage their Global Digital Workplace and Enterprise Networks," the homegrown IT firm stated.

"The initial term of the agreement is from July 2026 to December 2031, extendable for a further period of 5 years. The estimated value of the agreement during the initial term is $1.14 billion. This is entirely a net new business for the Company," HCLTech added.

The company, however, did not disclose the name of the Europe-based entity.

Separately, sharing his view on the broader IT sector, Apurva Sheth, Head of Market Perspectives & Research at SAMCO Securities, said, "While concerns around AI disruption, slowing discretionary spending and global macro uncertainty continue to dominate headlines, historical data suggests that periods of peak pessimism often create the best opportunities. Valuations have already corrected to levels below their long-term averages, making the risk-reward far more attractive than it was a few months ago."

Sheth added, "There is another historical trend that strengthens the case. Over the last 30 years, the second half of the calendar year has consistently been the strongest period for the Nifty IT Index. Average quarterly returns stand at just 3.4 per cent in Q1 and 0.6 per cent in Q2, but improve sharply to 10.2 per cent in Q3 and 11.3 per cent in Q4.

If earnings expectations stabilise and global technology spending gradually recovers, the second half of the year could once again prove rewarding for patient IT investors, he further stated.