The Nifty IT index reached a record high on Tuesday, climbing over 1.4% to 44,240, with all 10 of its constituents in the positive.As of 10:05 a.m. on Tuesday, the index was trading at 44,201, reflecting a 1.34% increase. Infosys led the pack, rising 2.4%, followed by LTIMindtree, Tech Mahindra, LTTS, Wipro, Persistent Systems, and HCL Tech, which all saw gains between 1% and 2%.Despite significant selling pressure across the broader market in November, the Nifty IT index has outperformed, rising more than 9% this month alone. On a year-to-date basis, the index has surged 23.7%, compared to an 11.5% rise in the Nifty 50.Several factors are driving this rally. The potential end of the US Federal Reserve's interest rate hikes and lower-than-expected inflation have improved sentiment for the IT sector. Investors are anticipating a rebound in corporate tech spending, which is vital for Indian IT firms, as the US is their largest market.Also Read: Zomato shares in focus as QIP launches, sets floor priceAdditionally, Indian IT companies have reported strong earnings, with stocks like Infosys and TCS driving the sector’s performance. Analysts are optimistic about the sector’s medium- to long-term growth, particularly with expectations of double-digit earnings growth in FY24-25, driven by a robust deal pipeline and new-age technologies like Generative AI.The rally also gained momentum following Donald Trump’s victory in the 2024 U.S. presidential election. His proposed corporate tax cuts have sparked optimism about increased discretionary spending by U.S. enterprises, benefiting Indian IT companies.Q2FY25 PerformanceIndia's technology sector delivered Q2 earnings slightly ahead of brokerages' estimates, though management guidance remained cautious. An analysis of 30 technology companies reveals that 13 reported double-digit earnings, while 2 posted triple-digit growth. Six companies reported single-digit net profit growth, while 9 companies saw a decline.While brokerages believe pessimism may be bottoming out, clear trends indicating a lift in discretionary spending in developed countries have yet to emerge. Infosys remains a top buy for many leading brokerages, followed by Tata Consultancy Services (TCS) and HCL Technologies. Among tier-2 and tier-3 companies, Coforge, Persistent Systems, and Cyient are preferred buys.Among the companies with double-digit profit growth were KPIT Technologies, Oracle Financial Services Software, Coforge, Persistent Systems, Wipro, and HCL Technologies. Also read: Vodafone Idea shares zoom 18% on in-principle Cabinet nod for bank guarantee waiverMeanwhile, companies like Cyient, Infosys, L&T Technology Services, LTIMindtree, Mphasis, and TCS saw more modest growth in the range of 1% to 8%. Tech Mahindra posted a net profit jump of 145%, a triple-digit increase.Brokerage ViewThe IT services companies within Motilal Oswal Financial Services' (MOFSL) universe reported healthy performance, beating estimates, with a median revenue growth of 2% QoQ in constant currency terms for 2QFY25 (compared to 1%/0.7%/1.2% in 3QFY24/4QFY24/1QFY25).In a note, it was stated that the results were encouraging, but the outlook remained slightly guarded, signaling persisting uncertainties. "This indicates that despite client pessimism bottoming out, a solid lift-off in discretionary spending has yet to emerge," the note said.The domestic IT companies' Q2FY25 performance marginally beat Antique Stock Broking's estimates. "After a decent 1H performance, Infosys upgraded its revenue growth guidance from 3%-4% to 3.75%-4.5%, while HCL Tech narrowed its growth guidance to 3.5%-5% from 3%-5%. However, Wipro's 3Q revenue growth guidance was below our expectation, ranging from -2% to +0%," the brokerage noted.Echoing a similar view, Antique said that management commentary from most companies highlights a cautious demand environment amid geopolitical uncertainties, although the outlook could improve in the near-to-medium term with further easing in inflation.Nuvama expects the revenue growth trajectory to improve going forward, backed by better deal-to-revenue conversion and an improving demand outlook due to favorable macroeconomic dynamics. "For the first time after seven quarters, IT companies added net headcount," the brokerage added.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)