Shares of information technology (IT) companies rose on Monday ahead of the US Federal Reserve’s two-day policy meeting beginning May 6, as investor sentiment turned positive amid expectations of a status quo on interest rates and continued foreign fund inflows into Indian markets.
The Nifty IT index gained over 1 percent during the day, extending its rally for the second straight session, before trimming some gains in line with broader market movements.
Coforge emerged as the top gainer on the index, rising 2.4 percent to touch an intraday high of Rs 7,560 on the NSE. The company will also declared its March quarter result today.
Persistent Systems advanced 2.09 percent, followed by LTIMindtree, which rose 1.01 percent. Tata Consultancy Services (TCS) and HCL Technologies also saw modest gains of up to 0.27 percent.
However, Infosys and Oracle Financial Services Software traded in the red, making them the only laggards in the 10-stock Nifty IT pack.
Tarun Singh Founder & MD, Highbrow Securities noted the investors anticipate a status quo on rates.
"The sector's upside hinges on the Fed's guidance—any dovish signals could ease concerns around US tech spending and support IT demand. However, Fed’s neutral-to-optimistic outlook could sustain momentum, while any hints of delayed rate cuts or recession concerns may weigh on sentiment. Currency benefits from a weaker rupee and sustained FII inflows are providing near-term support, though geopolitical tensions (India-Pakistan, US-China trade) remain an overhang. The Fed's stance will likely dictate short-term momentum, while long-term performance depends on global macro stability and corporate spending trends," he added.
Market participants are closely tracking the US Fed’s stance on interest rates, inflation, and economic growth. While the Fed is widely expected to hold its benchmark rate steady at around 4.3 percent, investors are awaiting signals on the path of future policy, especially in the backdrop of global trade tensions, reported Associated Press.
The Indian IT firms, which derive a large portion of their revenue from US clients stand to gain from any signs of a stable or accommodative monetary policy. A pause in US rate hikes could improve client spending in key markets.
The optimism in IT counters also coincides with renewed foreign investor interest. Foreign institutional investors (FIIs) turned net buyers in April, pumping in Rs 4,223 crore into Indian equities—the first net inflow in three months—on the back of strong domestic macro fundamentals and supportive global cues.
The United States Federal Open Market Committee will announce its policy decision on Wednesday, May 7.
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