Nifty IT gains 2,300 points in 2 days: Here's why
The Nifty IT index on Friday jumped to new heights at 35,947.60, hitting record levels for two days in a row. This impressive 8.73% gain is fueled by the US Federal Reserve's rate cut signal, robust US economic data, and a weak Indian rupee. Major IT players like Tata Consultancy Services (TCS), Infosys, HCL Technologies, Tech Mahindra, Wipro, and LTI Mindtree have seen a huge uptick in buying interest during this time.
Factors fueling the rally in Indian IT stocks
Market experts attribute the rise in Indian IT stocks to several factors. Saurabh Jain, Vice President of Research at SMC Global Securities, noted that the US Fed's indication of three rate cuts in 2024 has put growth stocks in the spotlight. Strong US economic data also suggests increased demand for services from Indian IT companies. Additionally, a weaker Indian rupee benefits these firms as they receive payments in US dollars, boosting their profit margins.
Influx of FIIs contributing to the surge
Another driving force behind the surge in Indian IT stocks is the anticipated influx of foreign institutional investors (FIIs) due to the buzz around the US Fed rate cut. Jain explained that as the US dollar and treasury yields are expected to decline, FIIs may shift their investments from currency and bond markets to equities.
Technical analysis and stock recommendations
Ganesh Dongre, Senior Manager of Technical Research at Anand Rathi, pointed out that the Nifty IT index faces resistance at 36,900 levels and has immediate support at 33,500 levels. "On breaching 36,900 levels we may expect the index to touch 39,200 levels by the end of March 2024," said Dongre. Jain recommended focusing on large-cap stocks like HCL Tech, Infosys, and TCS as they are likely to benefit first from these triggers.
Persistent Systems spearheaded Nifty IT index surge
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%. The Nifty IT index is still 10% away from its all-time high level of 39,447, hit in January last year.
