NSE Nifty IT Index Surges 1.44% on US Fed Rate Cut Expectations
The NSE Nifty IT index gained 1.44%, reaching 35,689.10 points, driven by positive investor sentiment regarding potential US Federal Reserve rate cuts. Mphasis led gains with a 4.74% increase, followed by Coforge at 2.60%. Major players like Infosys and TCS also saw significant upticks. CLSA projects 75 basis points of US rate cuts over the next 1 to 1.5 years, potentially boosting Indian IT companies' valuation multiples by 10-15%. Despite the day's gains, the IT index remains down 17.68% year-to-date, with a current P/E ratio of 25.41 times.
*this image is generated using AI for illustrative purposes only.
The NSE Nifty IT index demonstrated significant strength in afternoon trading, gaining 507.85 points to reach 35,689.10, marking a 1.44% increase. This upward movement comes as investors respond positively to expectations of potential rate cuts by the US Federal Reserve.
Leading Gainers
Mphasis emerged as the top performer, with its shares jumping 4.74% to ₹2,920.20. Following closely, Coforge saw a notable increase of 2.60%, reaching ₹1,769.20. Industry giants also participated in the rally:
- Infosys: Up 1.70% to ₹1,494.60
- Tata Consultancy Services (TCS): Gained 1.13% to ₹3,119.60
Trading Activity
The sector witnessed robust trading activity:
- Volume: 89.96 lakh shares
- Total value: ₹1,461.45 crore
- Infosys led in trading volume with 25.56 lakh shares
Analyst Projections
CLSA, a prominent brokerage firm, has projected:
- 75 basis points of US rate cuts over the next 1 to 1.5 years
- Potential increase in valuation multiples for Indian IT companies by 10-15%
- Outperform ratings maintained on Persistent Systems and Tech Mahindra
Sector Performance and Valuation
- IT index: Down 17.68% year-to-date
- Current price-to-earnings ratio: 25.41 times
- 52-week range: 30,918.95 to 46,088.90
Market Implications
The surge in the IT index suggests growing investor optimism about the sector's prospects, particularly in light of potential US interest rate cuts. However, the year-to-date decline indicates ongoing challenges, likely due to global economic uncertainties and shifting client priorities.
As the market digests these developments, attention will focus on the US Federal Reserve's future policy decisions and their potential impact on the Indian IT sector's valuation and performance.
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