The shares of IT companies sharply gained on September 10, pushing the sectoral index up more than 2 percent in the morning. The Nifty IT index led gains among the major sectoral indices, extending strong gains for the second consecutive session after five-day losing streak.
The IT index rose to 36,075.95 in the morning. Here are the possible triggers for today's sharp rise:
Trump says India-US trade talks to resume:
The sharp rise in the IT stocks today was fuelled after US President Donald Trump said Washington and New Delhi will resume negotiations to resolve the ongoing trade frictions.
In a social media post on Truth Social, Trump announced, "I am pleased to announce that India, and the United States of America, are continuing negotiations to address the Trade Barriers between our two Nations."
"I look forward to speaking with my very good friend, Prime Minister Narendra Modi, in the upcoming weeks. I feel certain that there will be no difficulty in coming to a successful conclusion for both of our Great Countries!" he further wrote.
While the tariffs were not implemented on IT services, the easing trade tensions between India and US will likely benefit the IT companies which derive major portion of their revenue from the American markets.
Rising hopes for Fed rate cut:
The US Federal Reserve is set to hold its FOMC meeting from September 16 to September 17. Analysts increasingly expect the American central bank to cut its rates this time, amid weakening jobs data and rising pressure from President Donald Trump's administration.
The US economy likely created 911,000 fewer jobs in the 12 months through March than previously estimated, according to the latest data from Labor Department's Bureau of Labor Statistics. This further hiked rate cut hopes.
A rate cut in the US will likely increase the discretionary spending capacity, which will likely help the IT companies which derive a major portion of their revenue from the American market.
The IT stocks had surged yesterday as well, led by Infosys. This came after the company announced that its board will meet on September 11 to consider a proposal for buyback of fully paid-up equity shares. If approved, this will be the first buyback of shares announced by India's second-largest IT firm since 2022, when the company had agreed to a buyback proposal of Rs 9,300 crore with a minimum buyback price of Rs 1,850 per share.
Oracle Financial Services Software (OFSS) shares were the top gainer on the Nifty IT index, rising nearly 8 percent. This comes after its parent company and NYSE-listed Oracle Corp issued an ambitious outlook for its cloud business, sending its shares to a record high. The company also announced huge layoffs.
Persistent Systems shares jumped nearly 5 percent, while Mphasis shares were up 4 percent. Coforge and LTI Mindtree shares gained more than 3 percent each, while Wipro, HCL Tech and Tech Mahindra shares rose over 2 percent each.
Tata Consultancy Services (TCS) shares gained nearly 2 percent, while Infosys shares were up more than 1 percent.
What lies ahead?
"The dual tailwinds from GST rationalization and anticipation of a U.S. Fed rate reduction are acting as a long-needed support to Indian equities, insulating them from global tariff and demand uncertainties," said Siddharth Maurya, Founder & Managing Director, Vibhavangal Anukulakara Pvt. Ltd.
"Though the IT industry has taken a hit this year, these decisions are evidence of resilience and the industry's core position in India's growth narrative. To investors, it is a reminder that long-term value resides in remaining aligned to structural pillars, even in times of short-term churn," the analyst added.
Bhavik Joshi, Business Head, INVasset PMS, however advised caution. "Foreign investors remain cautious, discouraging a sustained rally. While local policy cues and GST relief offer seasonal optimism, the lack of a sharp earnings turnaround or acceleration in contract wins keeps sentiment muted. The buyback announcement from Infosys may provide a short-lived jolt, yet the broader narrative remains one of structural caution rather than exuberance," he said.
"In essence, what separates IT from other sectors today is the 'global tether'. The expectation of a U.S. rate cut may lift overall market sentiment, but until global tech spend and deal pipelines visibly recover, IT will lag broader indices. For now, this underperformance reflects prudence—not weakness—and positions IT for a selective comeback once global visibility returns," he added.
Renewed optimism around capital allocation, coupled with easing rate-cut expectations globally, fueled broad-based gains across the sector, said Ajit Mishra – SVP, Research, Religare Broking. "However, participants shouldn't get carried away with a single day move and should wait for some signs of stability citing the prolonged underperformance," he added.
Also read: Our LIVE blog on stock market updates
(With inputs from Reuters)
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