Nifty IT hits 20-month high as Fed-fuelled rally extends

The Nifty IT index rallied over 4% to hit a 20-month high of 35,349 on Friday, extending its gaining streak on elevated bets of a US rate cut by March 2024. At 2 pm, the index gained nearly 1,400 points to its highest level of 35,741.60 in 52 weeks. It was among the top sectoral gainers.

All IT majors including Infosys, Tata Consultancy Services, HCL Technologies, Tech Mahindra, Wipro, LTIMindtree are witnessing huge buying interest in the last two trading sessions. Notably, HCL Tech, Infosys, TCS and Tech Mahindra were the top four gainers in the Nifty50 index.

Shares of Persistent Systems led the rally in the 10-pack Nifty IT index, rising nearly 6%, followed by HCL Technologies at 5%. Among others, Coforge was up 4.50%, TCS 4.29%, Infosys 4.16%, Tech Mahindra 3.98%.

However, the Nifty IT index is still 10% away from its all-time high level of 39,447, hit in January last year.

"Traders should be with largecap value names like Tech Mahindra, HCL, next few other names where the downside risk is very less and also these are very high dividend paying companies. So cash distribution is very strong and all also on growth, they have always surprised for positively. At least, places where there is a new CEO coming in, the chances are big turnaround, as we have seen in multiple mid-sized companies in past few years those remains high. So I will still say that, you should chase value with growth and not only growth and pay very expensive multiples right now so you should look at largecap names," said Sandip Agarwal, Fund Manager, Sowilo Investment Managers on IT.

"As IT is one of the growth segments, which hasn't yet participated in recent bull run, investors are pumping money behing IT majors like HCL Tech, Infosys, TCS, LTIM, TechM, etc," said Saurabh Jain, Vice President — Research at SMC Global Securities.

IT companies, which earn a significant share of their revenue from the US, rallied 4.5% this week, marking their best performance in a month.

The rise comes after US Fed Chair Jerome Powell acknowledged the risks of lowering rates too late, on Wednesday, which bolstered expectations of a 25 basis point rate cut by March next year and fuelled a rally across global stock markets.

That was the latest in a confluence of optimistic indicators that has boosted the domestic market.

The NSE Nifty 50 and BSE Sensex have gained about 1.5% each this week, set for their longest joint weekly winning streak since January 2018.