IT stocks climb on Fed rate cut hopes, weak rupee; Infosys, TCS lead as Nifty IT outperforms

Frontline information technology stocks including Infosys, TCS and HCL Technologies rose sharply on Wednesday as rising expectations of a US Federal Reserve rate cut next month and continued weakness in the Indian rupee boosted sentiment across the sector. The Nifty IT index gained 1.48 percent to 37,371.3 in afternoon trade, emerging as one of the top-performing sectoral indices.

Benchmark indices also strengthened. As of around 3:15 pm, BSE Sensex was up 1,044.6 points or 1.2 percent at 85,631.6, while NSE Nifty added 322 points to 26,206.8.

Infosys shares led the technology pack with a 1.93 percent rise to Rs 1,559.55. It was followed by TCS at Rs 3,162, up 1.35 percent. Wipro climbed 1.75 percent to Rs 250.10; HCL Technologies gained 1.03 percent to Rs 1,617.20; and LTIMindtree advanced 1.04 percent to Rs 5,893.75. All Nifty IT constituents were trading in green.

US Fed cut expectations strengthen, weaker rupee provides additional tailwind

The upmove in IT shares tracked a spike in expectations of a US rate cut, fuelled by weak economic data and recent dovish commentary from Federal Reserve officials. Markets now anticipate the possibility of another 25-basis-point reduction in December. A rate cut in the US is typically favourable for Indian technology companies, as it tends to support spending by US-based clients who collectively drive more than half of the sector’s revenue.

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Currency movements added to the positive backdrop. The Indian rupee has depreciated over 4 percent so far in 2025 and touched a record low of Rs 89.49 per dollar on November 21 amid sustained dollar demand from importers and concerns over imported inflation. The rupee opened weaker again on Wednesday at 89.25 versus the previous close of 89.22. A weaker domestic currency generally benefits IT exporters, who earn a large portion of their revenue in dollars, making the rupee depreciation a supportive factor for sector profitability.

Valuation comfort and improving sentiment

Analysts said that large-cap IT stocks now trade at more reasonable valuations after several months of correction, while mid-caps remain relatively expensive. Investor appetite has also been supported by expectations that the long-awaited AI services cycle may be nearing an inflection point.

Earlier this week, Motilal Oswal said the foundational “store, compute and infra layer” of the AI capex cycle is now largely in place, echoing the pattern seen during the cloud build-out of 2016-18. The brokerage expects incremental AI-related spending to shift from hardware to services over the next 6-9 months, potentially lifting growth rates for Indian IT companies from the second half of FY27 and accelerating further in FY28.

Motilal Oswal also highlighted that sector valuations appear attractive, with IT services’ share in Nifty profits steady at around 15 percent even as the sector’s weight in the benchmark index has fallen to a decadal low near 10 percent.

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