Nifty IT index shines with 1.5% surge; TCS, Infosys, HCLTech lead gains in IT pack

August 14 marked the fourth session of gain for the Nifty IT index

The Nifty IT index emerged as a standout performer among the 13 major sectoral indices following favourable US economic data. The IT index surged 1.5 percent on August 14 with TCS, Infosys, and HCLTech leading the rally.

The boost in IT stocks was fueled by data showing a smaller-than-expected increase in US producer prices for July. The producer price index (PPI) for final demand rose by just 0.1 percent, falling short of economists' forecasts of 0.2 percent. The PPI had seen a 0.2 percent increase in June. This easing inflationary pressure has sparked optimism that the Federal Reserve may soon cut interest rates, lifting market sentiment.

Ajit Mishra, senior vice president of research at Religare Broking said, "The current performance of IT stocks can be attributed to broader global factors. The US inflation data and the sharp rebound of the Nasdaq Composite last week have influenced the sector positively. The IT sector, despite recent volatility, is receiving a boost from these global cues."

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August 14 marked the fourth session of gain for the Indian IT index. In the US, tech-heavy Nasdaq Composite also gained for four sessions, from August 8-13.

Mishra further said that while short-term volatility may persist, the IT sector is expected to maintain a positive tone.  "A consolidation phase could persist until we see US election results and resolution of recession concerns. However, post-US elections, clarity on demand in the BFSI sector and other IT services will likely ease current pressures," Mishra said.

Shares of Wipro, LTIMindtree,  Tech Mahindra, Infosys, HCLTech, and TCS were up 0.3-2.2 percent as of 12.40 PM. Mphasis, Persistent Systems, Coforge, and L&T Technology Services traded 0.8-1.5 percent higher.

The June quarter earnings reports of IT companies have been mixed, with IT majors performing better than mid-cap IT firms. Mishra said that the guidance by IT companies suggests that the sector might see an improvement in performance by February 2025.

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