After seven consecutive sessions of losses, Firstsource Solutions shares surged nearly 18% on Tuesday, 15 September, as Indian IT stocks staged a sharp rebound, with the broader IT pack gaining more than 4%. The rally comes as investors reassess the outlook for traditional software companies amid the evolving debate around the pace of artificial intelligence (AI) development and its potential impact on technology spending.
The recent strength in global technology stocks has also provided a positive backdrop for Indian IT companies. Analysts believe a more measured pace of frontier AI development could ease concerns around rapid technology obsolescence and give enterprises greater visibility on their technology investments.
Firstsource Solutions share price today opened at an intraday low of ₹247.75 apiece on the BSE, the stock touched an intraday high of ₹292.15 per share.
Rajesh Bhosale, Technical Analyst at My Advisor Alpha, said the stock has witnessed a price and volume breakout, with prices gaining around 15% and crossing all key moving averages in a single session. He noted that the stock has also moved above its August swing high, signalling strengthening positive momentum.
According to Bhosale, the positive momentum is likely to extend, with ₹310 emerging as the next key resistance, while ₹270 is expected to act as support.
Measured AI development could support IT spending
Kunal Bajaj, Analyst, and Shreya Mehra, Associate – Technology at Choice Institutional Equities, said the recent debate around the pace of AI development could be positive for traditional software companies.
They noted that Anthropic CEO Dario Amodei’s call to “pace the frontier”, backed by OpenAI CEO Sam Altman, has raised concerns about the pace of AI infrastructure spending and triggered a sell-off in companies directly linked to AI. In contrast, software stocks have demonstrated relative strength, with Infosys and Wipro ADRs gaining 6% and 1%, respectively, while Cognizant, ServiceNow and Accenture advanced 5–8%.
According to the analysts, this divergence suggests investors are reassessing the risk-reward profile across the technology sector. A more measured pace of frontier-model development could reduce concerns around rapid obsolescence and disruption for traditional software businesses.
Why this could benefit Indian IT
For Indian IT companies, the analysts believe a slower AI development cycle could provide enterprises with greater visibility on technology choices. This may encourage clients that had adopted a wait-and-watch approach to resume AI and digital spending.
They expect the trend to be incrementally positive for Indian IT, particularly in areas such as AI implementation, cloud transformation, governance and cybersecurity. A longer technology monetisation window could also give IT service providers more time to offset productivity-related pressure on traditional services.
However, the analysts cautioned that the structural risk of AI-driven productivity gains being passed on to clients remains. Therefore, the key factor to monitor will be the balance between AI-led revenue growth and productivity-led deflation.
Fed decision remains key near-term trigger
The analysts also highlighted the US Federal Reserve’s upcoming policy decision as an important near-term catalyst for Indian IT stocks. The recovery in Indian IT ADRs comes ahead of the September 16 Fed decision, with markets pricing in around 90% odds of a 25-basis-point rate cut.
Fed guidance, US bond yields and inflation commentary, alongside the evolving AI-spending outlook, are likely to remain key drivers for Indian IT stocks given their significant exposure to the North American market.
Company details
Firstsource Solutions, part of the RP-Sanjiv Goenka Group, is a global provider of business process management and technology services, serving clients across healthcare, banking and financial services, communications, media, technology, retail and utilities.
The company operates across markets including the US, UK, India, Philippines, Mexico, Romania, Trinidad & Tobago, South Africa and Australia. With more than 25 years of domain expertise, Firstsource focuses on helping enterprises design, build and operate intelligent business processes through its technology-led and AI-enabled delivery model.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
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