The shares of Indian IT companies jumped on October 23 amid rising hopes for a trade deal between India and US, along with other key factors. The sharp rise in the share prices pushed the Nifty IT index up more than 2 percent to close at 36,078.65.
Nifty IT has now emerged as the top gaining sectoral index on the market today. Notably, it has crossed the 36,000-mark for the first time in more than one month.
Infosys promoters opt out of Rs 18,000-crore share buyback:
Infosys shares were the top gainer on the index, jumping nearly 4 percent to close at Rs 1,525 apiece. This comes after promoters and promoter group, including Nandan M Nilekani and Sudha Murty, decided not to participate in the company's Rs 18,000 crore share buyback.
"The promoters' decision to opt out of the buyback signals confidence in future prospects and improves the entitlement ratio for retail investors," Saurabh Jain, assistant vice president of retail equities at SMC Global told Reuters.
HCLTech shares gained nearly 3 percent, while Mphasis and Tata Consultancy Services (TCS) shares jumped more than 2 percent. Tech Mahindra, Wipro and Coforge shares rose over 1 percent each, while Persistent Systems and LTIMindtree shares closed nearly 1 percent higher each.
Growth Optimism
The companies remain optimistic about the second half of the ongoing financial year 2026. While announcing its Q2 results, HCL Tech retained its full-year FY26 revenue growth guidance at 3-5 percent in constant currency terms. Within this, HCL Tech raised its services segment growth guidance to 4-5 percent from 3-5 percent earlier - now the highest among India’s top five IT firms.
Promoters not cashing out signals confidence in the business prospects, and adding to the overall investor bullishness in IT sector, Anita Gandhi, founder and head of institutional business at Arihant Capital Markets told Reuters.
US to reduce tariffs on Indian imports to 15-16%, says report:
According to a report by Mint, India and US are engaged in extensive and advanced discussions on the deal, which may see the tariffs on Indian exports to US reduce to 15-16 percent, from the current 50 percent.
India may agree to reduce its imports of Russia oil, as part of the trade deal, and may also allow in more non-genetically modified (GM) American corn and soymeal into its markets, the report added citing people familiar with the matter.
While the Trump tariffs did not directly impact the IT companies, the souring relations between the two countries bore an impact on the firms. The rising possibility of a trade deal, implying better relations between India and US, may have boosted the shares of the IT companies, who derive a major portion of their revenue from the American market.
IT sector will be one of the beneficiaries of a potential India-U.S. trade agreement. A few deals could've been stuck because of the trade uncertainties, Arun Malhotra, fund manager at CapGrow Capital told Reuters.
US to curb software exports to China:
Additionally, reports said that US is considering to curb exports of its software to China. The new export curbs, which would include goods ranging from laptops to jet engines, are some of the measures being considered in retaliation to China's latest round of rare earth export restrictions. These restrictions may be beneficial to Indian IT majors as they might look to become the suppliers of such software instead of the US, Informist reported.
US Fed rate cut hopes:
The sharp rise also comes amid hopes for more rate cuts by the Federal Reserve. The American central bank is expected to lower the interest rate by a quarter point to 3.75-4 percent on October 29, according to a Reuters poll. The majority expect another cut in December.
A rate cut by the Fed will likely improve the discretionary spending in US, which in turn may benefit the IT companies.
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