Infosys, TCS, other IT shares rise as Fed chair Powell assures on growth, maintains 2025 rate cut view

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26 Aug, 2025 12:21

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The shares of leading Indian IT companies Infosys, Tech Mahindra and Tata Consultancy Services (TCS) surged on March 20 after the US Fed chair Jerome Powell in his interaction with reporters played down concerns over growth and inflation arising out of the threat of reciprocal tariffs by Trump administration, and indicated that rate cuts were likely later this year despite the uncertainties.

The US Federal Reserve maintained its projection of two rate cuts for 2025, despite inflationary pressures following US President Trump's tariffs on trade partners.

The sharp rise in the IT stocks pushed the Nifty IT index up by nearly 1.3 percent to 36,699, the highest level for the index in last five sessions. Domestic IT stocks followed their US peers, which too had recorded gains after Fed's comments. Indian IT companies have strong ties with the US in terms of exports or consultancy services.

Angel One's Ankita Pathak has projected a near-term positivity following US Fed's comments. "Fed is still aligned with market expectations of two rate cuts in 2025 (and 2 more rate cuts in 2026). S&P 500 rose 1.1% and the Nasdaq 100 gained 1.3%, Gold touched new high and 10-year bond yields dropped by 4 bps after the Fed gave a dovish outlook for the monetary policy in the rest of the year, despite higher inflation."

Akshay Chinchalkar, Head of Research at Axis Securities said, "The dots suggest 50 bps worth of rate cuts this year, but what was noteworthy is that all FOMC members felt increasing price pressures were a real risk. In a way, the risk of stagflation - slow growth and elevated inflation - is what the Fed acknowledged. Stocks, including domestic equities, have rallied largely, as slow growth would mean more rate cuts, but that expectation is not on solid footing because of the tariff-related uncertainty, which Powell also flagged clearly."

Mphasis shares were the top gainer on the index, jumping over 2 percent to trade at Rs 2,332 apiece. The stock has now made some recovery after hitting a 52-week low of Rs 2,170.25 per share earlier in March. TCS shares also surged nearly 2 percent to hover around Rs 3,560 per share.

HCL Tech saw its share price rise nearly 1.7 percent to trade at Rs 1,571 apiece. Heavyweight Infosys also recorded a strong uptick in its share price. The stock surged 1.5 percent to trade at Rs 1,610 per share.

Other IT stocks which recorded gains to trade in the green included Tech Mahindra, Wipro, Coforge and LTI Mindtree.

The US Federal Reserve said 'uncertainty' around the economic outlook has risen in recent weeks, acknowledging upside risks to inflation but added that the current unemployment rate of 4.1 percent suggests the job market is in balance.