The shares of IT companies surged on May 29 after US chipmaker Nvidia posted strong Q1 results and a US trade court blocked President Trump's reciprocal tariff from taking effect, sending the Nifty IT index up nearly a percent as the top sectoral gainer in the early trade, snapping a two-day losing streak.
The Manhattan-based Court of International Trade ruled that Trump overstepped his authority by imposing sweeping duties on imports from nations which sell more to the US than they buy from it. The court said the America's constitution gives The Congress exclusive authority to regulated commerce with other nations.
"The court does not pass upon the wisdom or likely effectiveness of the President’s use of tariffs as leverage. That use is impermissible not because it is unwise or ineffective, but because [federal law] does not allow it,” a three-judge panel said. The Trump administration, however, has filed a notice of appeal against the order.
IT stocks derive a major portion of their revenue from US market. Earlier when the tariffs had sparked recession fears, the IT stocks had strongly tumbled. Now, a possible blockage of the tariffs has likely boosted the stocks.
Additionally, Jensen Huang-led Nvidia posted better than expected Q1 results dodging tariff turbulences and posted a 69 percent on-year jump in revenue at $44.1 billion. The net income surged 26 percent on-year to $18,775 million.
The chipmaker's revenue growth was despite restrictions to sell advanced semiconductors to China. "On April 9, 2025, NVIDIA was informed by the US government that a license is required for exports of its H20 products into the China market. As a result of these new requirements, NVIDIA incurred a $4.5 billion charge in the first quarter of fiscal 2026 associated with H20 excess inventory and purchase obligations as the demand for H20 diminished," Nvidia said. The total income reported by the company takes this charge into consideration.
Wall Street futures strongly rallied following the court ruling and Nvidia's results, with S&P 500 Futures up over 1.5 percent, and Nasdaq futures higher by nearly 2 percent a short while ago.
LTI Mindtree was the top gainer on the index, jumping nearly 3 percent to trade at Rs 5,229 apiece. Persistent Systems and Coforge were up nearly 2 percent, while heavyweight Infosys gained nearly 1.5 percent.
Mphasis and Tech Mahindra shares trading nearly 1 percent higher, while Wipro and TCS were trading with marginal gains.
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