Mindtree, Infosys, Wipro Lead Rally On Fed Easing, Improving Outlook For US Demand

Indian technology shares surged on Thursday after the US Federal Reserve cut interest rates for the first time this year. The Nifty IT index was the top sectoral gainer, rising 1.4% in early trade, with all 10 constituents trading in the green.

LTIMindtree led the gains, rising 3.1%, while Wipro climbed up 2.1%. Bellwethers Infosys and Tata Consultancy Services (TCS) were up 1.9% and 0.6%, respectively, and Mphasis gained 1.5%.

Fed Move Sparks IT Rally 

On Wednesday, the Federal Reserve cut the key borrowing rate by 25 basis points, bringing down the federal funds rate to the 4% to 4.25% range, in line with market expectations.

This is the first rate cut announced by the Fed in 2025. The rate reduction comes at a time when inflation hasn't shown any signs of a significant rise.

Strong US Demand Outlook

A US rate cut is expected to boost discretionary spending, a trend that could benefit IT firms that earn a large share of their revenue from the North American market. This could also lead to more foreign inflows.

All Eyes On US-India Trade Talks

Investors are also monitoring the developments on the US-India trade deal after both countries resumed direct, in-person negotiations this week, indicating a thaw in trade relations. 

Analyst Take On Rate Cut

SEBI-registered analyst Front Wave Research said the Fed's 25 bps cut, alongside guidance for another 50 bps of easing, could ease selling pressure from foreign institutional investors and support the rupee. 

Lower global yields could provide an added tailwind for Indian equities, particularly in rate-sensitive sectors, they added.

Sector Watch

The Nifty IT index has been on a rally lately, gaining in six of the last eight sessions. Sentiment is also boosted by the potential thaw in the US-India relationship, with a renewed trade deal looming.

Retail sentiment around the index changed to 'neutral' from 'bearish' a week earlier. It is also among the top trending indices on Stocktwits.

Over the past month, Infosys has added 7.1%, TCS has gained 5.6%, Wipro has risen 5.1%, Tech Mahindra climbed up 4.6%, and HCL Technologies edged 0.8% higher.

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