The Nifty IT index gained over 2 percent on December 5 and hit an all-time high of 45,027.95, as optimism in US technology shares spilled over into the domestic market. This uptick followed encouraging comments from Federal Reserve Chair Jerome Powell on US economic growth.
Speaking at a New York Times event, Powell, said that the US economy is stronger now than the central bank had expected in September when it began reducing interest rates and appeared to signal his support for a slower pace of interest-rate cuts ahead.
Investors are anticipating a third consecutive interest-rate cut at the central bank's meeting on December 17-18. This benefits Indian IT companies, which derive a significant portion of their revenue from the US.
In the US, the tech-heavy Nasdaq Composite surged 1.3 percent to close at 19,735.
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By 2:45 PM, the Nifty IT index was up over 2 percent at 44,878.40, extending its winning streak to a fifth consecutive session. All 10 constituents of the index traded higher, with Infosys, TCS, Wipro, LTIMindtree, Tech Mahindra, and HCLTech leading the pack, posting gains of 2–3 percent.
Midcap IT stocks also joined the rally, with Coforge, L&T Technology Services, Mphasis, and Persistent Systems rising 0.5–1.5 percent.
Persistent Systems shares rose after CLSA raised its target price for the stock to Rs 8,462 per share, an upside of nearly 39 percent from its current market price. The brokerage firm also increased both near-term and long-term revenue growth forecasts. It also raised its EBIT margin assumption for FY27 to 16.2 percent from 15.5 percent.
Meanwhile, Bank of America has outlined seven pivotal trends expected to shape the IT industry's trajectory in 2025. The brokerage noted that the BFSI (Banking, Financial Services, and Insurance) sector still has room for recovery, with other sectors likely to join the growth bandwagon, expanding the IT sector's revival.
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BofA said that the optimism being observed this year's end is different from what was seen at the end of 2023.
Artificial Intelligence (AI) is projected to be a net positive contributor to the IT sector in 2025, according to the brokerage. Additionally, cloud spending, which had slowed, is anticipated to rebound strongly next year.
The macroeconomic environment in the US could also play a supportive role. Expected rate cuts in the world's largest economy might incrementally boost IT budgets, increasing room for spending plans.
Moreover, pricing trajectories for IT services are holding steady.
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