IT Stocks Rally as US Fed Signals Possible Rate Cuts
Indian IT heavyweights—Infosys, Tech Mahindra, and Tata Consultancy Services (TCS)—saw a bullish rally on March 20, after US Federal Reserve Chair Jerome Powell reassured investors about economic resilience despite the uncertainty caused by trade policy concerns. Powell’s remarks pumped in optimism in the markets, leading to a surge in IT stocks.
The US Fed maintained its outlook for two interest rate cuts in 2025, even in the face of rising inflation caused by trade restrictions. This dovish stance provided a boost to the Indian IT sector, which heavily relies on the US market for business and exports.
Nifty IT Index Hits a Five-Session High
With investor sentiment turning positive, the Nifty IT index climbed 1.3% to reach 36,699, marking its highest level in the last five trading sessions. The upswing mirrored Wall Street trends, where US tech stocks also posted notable gains following Powell’s comments. Given the strong correlation between Indian IT companies and their US counterparts, this rally was no surprise.
Few market experts anticipate near-term positivity, fuelled by expectations of rate cuts. They opined that this optimism propelled the S&P 500 up by 1.1% and the Nasdaq 100 by 1.3%. Gold prices soared to a new peak, while 10-year bond yields dipped by 4 basis points after the Fed hinted at a looser monetary policy.”
Top Gainers: Mphasis, TCS, and Infosys Shine
Among IT stocks, Mphasis led the charge, climbing over 2% to trade at ₹2,312 per share, rebounding from its recent 52-week low of ₹2,170. TCS followed suit, gaining nearly 2% to hover around ₹3,565 per share. HCL Tech saw a 1.7% jump, touching ₹1,577 per share, while Infosys advanced 1.5%, reaching ₹1,618 per share.
Other IT players such as Tech Mahindra, Wipro, Coforge, and LTI Mindtree also traded in the green, reflecting overall investor confidence in the sector.
Global Markets React to Fed’s Dovish Stance
The impact of the Federal Reserve’s comments rippled not only Indian markets but also global markets. Asian stocks climbed, mirroring gains on Wall Street, as investors welcomed the possibility of interest rate reductions. The Fed emphasized that inflation risks remain, but also reassured that the current unemployment rate of 4.1% indicates a balanced job market.
Key Global Market Movements:
- S&P 500 futures edged up 0.64% as of 2.00 pm as per IST
- Hang Seng futures showed little movement
- Australia’s S&P/ASX 200 climbed 0.87%
- Euro Stoxx 50 futures rose 0.24%
Across sectors, IT companies reaped the benefits, logging a 1.3% gain, as a significant chunk of their revenue stems from US markets.
What Lies Ahead for Indian IT Stocks?
With rate cuts seemingly on the horizon, IT companies stand to gain from improved liquidity and a potentially weaker US dollar, making Indian exports more competitive. However, ongoing trade tensions and tariff-related concerns remain an overhang. Investors will keep a close eye on further Fed pronouncements and global macroeconomic cues.
For now, the Indian IT sector is enjoying its moment in the sun, with the Fed’s dovish signals acting as the wind beneath its wings. But as always in the stock market, unpredictability is the only certainty!
Disclaimer: The views and investment insights provided here are based on publicly available information and do not constitute financial advice. Readers are advised to conduct their own research or consult certified financial experts before making investment decisions.