IT stocks : On December 19, shares of Indian IT companies continued to rise for the third consecutive session. Expectations of a Fed rate cut have increased as inflation fears in the US have eased and Accenture’s better-than-expected Q1 results have supported investor sentiment. Its effect was seen on IT shares. The Nifty IT index rose more than 1 percent to the day’s high of 39,054.35 due to rise in prices of IT shares. After this there was some decline in the index. At the end of trading, it closed at 38,691.60 with a gain of 0.15 percent.
US retail inflation rose 2.7 percent year-on-year in November, which is less than the 3 percent increase in the 12 months to September. A softening in the US Consumer Price Index released by the Labor Department’s Bureau of Labor Statistics on Thursday has rekindled hopes of further rate cuts by the US Federal Reserve. Low interest rates in the US make equities of emerging markets like India attractive for foreign portfolio investors as this leads to a generally lower trend in Treasury yields and the dollar. This also supported our markets today.
The rate cut in America is also expected to increase the limit on non-essential expenditure, which will benefit IT companies. These companies get a major part of their earnings from the North American market.
Jefferies’ opinion on IT sector
Jefferies warns of downside risk to Indian IT stocks after Accenture estimates 1.5-4.5 per cent organic growth in FY26. The international brokerage said Accenture’s “stable to moderate” outlook indicates limited discretionary spending despite the uptick in GenAI projects. Additionally, Accenture has maintained 2-5 percent annual revenue growth guidance despite a strong Q1, indicating uncertainty in demand.
Jefferies expects PE expansion of Indian IT companies to be limited and has maintained its stance of betting only on selective stocks in this sector.
Today’s top IT gainers
Shares of Persistent Systems, Tata Consultancy Services (TCS), Tech Mahindra, Infosys, Wipro and Mphasis fell up to 1 percent in intraday today. Whereas, shares of Coforge, LTI Mindtree and HCL Tech remained in the red. These declined by up to 1 percent.
Disclaimer: The views expressed on Moneycontrol.com are the personal views of the experts. The website or management is not responsible for this. Money Control advises users to seek the advice of a certified expert before taking any investment decision.