After witnessing a sharp drop in the first four trading sessions of the last week, the Nifty IT index has jumped back over 7% since last Friday. The index extended its winning streak for the fourth consecutive session on Wednesday, May 20, 2026. But to understand why it matters, you first need to understand what caused the fall in the first place.
What Led To The Recent Decline In The Nifty IT Index
The index shed around 23% on a YTD basis amid rising concerns over the long-term viability of traditional IT service business models in the age of AI-led automation.
The reason was OpenAI's announcement of what it is calling the OpenAI Deployment Company. This is not just another product launch. OpenAI is moving from being a technology provider to becoming a full-service consultant that embeds its own engineers directly inside large organisations to handle complex AI implementation work. The venture is backed by over $4 billion from more than 19 investors including TPG, Bain Capital, Goldman Sachs, and SoftBank.
In connection with the launch, OpenAI agreed to acquire Tomoro, an applied AI consulting and engineering firm, bringing approximately 150 experienced Forward Deployed Engineers and Deployment Specialists to the OpenAI Deployment Company from day one.
By Thursday, May 14, 2026, the Nifty IT index had fallen over 7% across four consecutive sessions, hitting a 52-week low of 27,078.
Why is the Nifty IT Index Rallying?
The IT shares witnessed a recovery in their prices from Friday, May 15, 2026, due to the up-move in US technology stocks along with favorable market sentiments prevailing globally. The Nifty IT index increased by 1.30% on the day, and recovered from its previous fall when the index was at 29,329.45 on May 11, 2026.
IT shares advanced further on Wednesday, May 20, 2026, as a stronger US dollar improved the earnings outlook for export-oriented IT stocks. A weaker rupee, while a pressure point for the broader economy, works in favour of IT companies since they earn in dollars and report in rupees; every dollar earned translates into more rupees when brought home. The rupee touched a fresh record low of ₹96.96 per dollar on May 20, 2026, which, while concerning imports and inflation, gave an additional tailwind to IT exporters.
The recovery was also aided by hopes of easing US-Iran tensions. However, not everything was pointing in the right direction. The US 10-year Treasury yield climbed to 4.6%, a level that typically puts pressure on growth stocks globally, including technology. Elevated crude oil prices and persistent geopolitical risks in West Asia also kept investor sentiment from turning fully optimistic.
Coforge Shares Up By 11% In Four Sessions
Coforge also remained in focus after reporting strong Q4FY26 results. The company posted a PAT of ₹612.3 crore, up 144.8% QoQ and 134.4% YoY,showing strong operational performance. Separately, Coforge allotted 3,52,818 equity shares under its Employee Stock Option Plan on May 17, 2026, taking the company’s paid-up equity share capital to ₹85.99 crore.
