The shares of IT companies strongly surged on April 23 after US President Donald Trump hinted at slashing tariffs on China substantially from 145 percent. The Nifty IT index jumped over 4 percent to close at 35,414.65.
Trump recently said that he will be 'very nice' to China in any trade talks. "145 percent is very high and it won't be that high, not going to be that high. No, it won' t be anywhere near that high. It'll come down substantially, but it won't be zero. It used to be zero, we were just destroyed," he said. Additionally, China also urged US to end threats and resort to talks on tariffs to settle differences.
These latest developments may have eased concerns over the trade war and the resulting possibilities of a US recession. Indian domestic IT companies derive a major portion of their revenues from US. Hence, the lower risk of a US recession may have boosted the IT stocks.
HCL Tech shares were the top gainer on the index, rising nearly 8 percent to trade at Rs 1,594 apiece. The sharp rally in the share price came after the IT giant released its results for the January–March quarter (Q4 FY25), which were more or less in line with expectations. HCL Tech reported a 6 percent year-on-year (YoY) increase in revenue from operations to Rs 30,246 crore in Q4. Net profit for the quarter meanwhile rose 8 percent YoY to Rs 4,307 crore during the reported quarter.
"The earnings and commentaries from companies that have so far reported results have mostly been positive, especially HCL Tech. On top of that, the correction in the IT stocks was huge. All these factors are contributing to the gains," Anita Gandhi, founder and head of institutional business at Arihant Capital Markets told Reuters.
Coforge shares followed, rising over 6 percent to trade at Rs 7,400 apiece. Notably, 48 percent of the company's revenue in financial year 2024 was derived from the American market. Persistent Systems shares meanwhile rose over 4 percent to trade at Rs 5,160 apiece.
Ahead of its Q4 results, LTI Mindtree shares soared nearly 5 percent to trade at Rs 4,537.9 apiece. The company is also expected to declare a final dividend for the financial year 2025. Choice Broking expects the company to report a 10.4 percent YoY rise in revenue due to deal ramp-ups, reversal of furloughs and continued growth momentum in BFS vertical.
Tech Mahindra shares meanwhile closed nearly 5 percent higher, while heavyweights Infosys and Wipro were up nearly 4 percent. Mphasis and TCS shares were meanwhile up nearly 5 percent and 3 percent respectively.
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