- Nifty IT index rallied more than 2 percent on Monday morning, emerging as the best-performing sectoral index after easing geopolitical tensions triggered a sharp fall in crude oil prices, reducing inflation concerns and tempering expectations of a US Fed rate hike this week.
- IT stocks led market gains on Monday, with heavyweights Infosys and TCS jumping 2-3 percent each, as the Nifty IT index climbed more than 2 percent due to easing expectations of a US Federal Reserve interest rate hike boosting sentiment towards the rate-sensitive sector.
- Nifty IT index hit the day's high of 29,537.50, rising 2.67 percent over its last close, extending month-to-date gains to 12 percent.
- Today's rally coincided with Jefferies' upgrade for the Indian IT sector to 'neutral' from 'underweight', indicating improved valuations after a sharp selloff this year.
- Investors have turned cautious on the sector as artificial intelligence reshapes the technology services landscape, and discretionary spending by global clients remains subdued.
The Nifty IT index rallied over 2% on Monday, reaching a high of 29,537.50, driven by easing fears of a US Federal Reserve rate hike and improved investor sentiment.13
The index's month-to-date gains now stand at 12%, following a series of upgrades and a positive outlook for the sector.
According to Jefferies, the Indian IT sector was upgraded to 'neutral' from 'underweight', citing improved valuations after a significant selloff earlier this year. JM Financial noted that operational performance among Indian IT services companies has remained decent, particularly in the BFSI vertical, which continues to show strength.
Despite the overall positive sentiment, Ajit Mishra of Religare Broking cautioned that discretionary spending has not yet seen a meaningful recovery, suggesting that current gains may be a result of selective buying by investors. Wipro Ltd. was the only stock to decline, falling 0.76%, while Latent View Analytics Ltd. led the gains with a 4.88% rise.5
The rally coincided with a sharp decline in crude oil prices, which eased inflation concerns and tempered expectations of a rate hike. CME FedWatch data indicated a 33.7% probability of a 25-basis-point rate hike, down from 37.4% on Friday. Ponmudi R, CEO of Enrich Money, stated that the easing geopolitical tensions have lifted investor sentiment significantly.
“The Nifty IT index has extended month-to-date gains to 12%, driven by improved valuations and a neutral outlook from Jefferies. Despite the rally, Wipro bucked the trend, falling 0.76%, while Latent View Analytics led the gains with a 4.88% rise.”
