Information technology stocks soared in trade on March 25, extending the gains for the fourth consecutive session, as bulls took over the reins from the bears. Further, US President Donald Trump's softening stance on tariffs buoyed sentiment, leading to increased buying interest.
The Nifty IT index led the sectoral gainers, amid a positive market sentiment, rallying over 2.3 percent at 9.55 am.
All ten constituents of the index traded with gains, with HCL Tech, L&T Technology Services, Coforge, and Mphasis leading the gains, jumping up to three percent, as the midcap IT services players outperformed their large-cap counterparts.
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With reduced business and consumer confidence as a result of President Trump's threats of tariffs, investors are more uncertain regarding the growth outlook of the Indian IT landscape, that depends on US for a large chunk of its revenue.
The US president has been saying that the reciprocal tariffs are the key tool to pivot the economy, which is increasingly staring at recession. “April 2nd will be the reciprocal day, and we will be bringing back some money that has been taken from us.” However, recently, US President Donald Trump has stated that he is opening to giving 'breaks' to countries on his reciprocal tariffs.
"Trump’s latest message that he will be 'flexible' on tariffs and will 'give breaks to many countries' has aroused hopes on some softer treatment to India. But we will have to wait till April 2, 2025," noted VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
Given the negative sentiment, IT stocks were been underperforming on fears on US growth slowdown impacting the Indian IT industry. However, with a reduced valuations and improving outlook, experts noted that the risk-reward in IT stocks is now favourable for buyers.
On the flip side, international brokerage Morgan Stanley suggested that global macroeconomic shifts and technological changes pose rising risks to the domestic information technology sector, potentially impacting valuations and revenue growth.
Infosys shares soared despite international brokerage Jefferies lowering its price target by 15 percent to Rs 1,835 from Rs 2,150, while reiterating its ‘Buy’ rating. The revised target now suggests a 15 percent upside from the last close—down from the earlier potential of 35 percent.
The shares of HCL Tech also surged over 3 percen after the company announced that it has formed a strategic partnership with Western Union, and will set up a new India-based technology center in Hyderabad.
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