Prime Highlights:
- Shares of Indian IT companies, including Infosys and Wipro, rose for the fourth consecutive day, driven by strong investor interest and market optimism.
- Hopes of US Federal Reserve interest rate cuts and positive corporate results are boosting confidence in the IT sector.
Key Facts:
- Infosys ADRs hit record highs due to short-covering, while top gainers on the Nifty IT index included Wipro and Infosys, rising over 2 percent.
- A weaker rupee benefits IT companies as most of their revenue comes from US dollars, adding further support to the sector.
Background:
Shares of Indian IT companies rose on Tuesday, pushing the Nifty IT index higher for the fourth day in a row. The rise was supported by a jump in Infosys ADRs, hopes of US interest rate cuts, and better-than-expected IT sector earnings.
At 10:10 am, the Nifty IT index gained 1.35 percent to 39,214.90, extending its four-session winning streak, during which the index has climbed more than 1,150 points, representing over 3 percent growth.
Infosys’ ADRs touched a record high, driven by aggressive short-covering after a major lender recalled a large chunk of stock lent in the market. The sudden recall led traders with short positions to quickly buy back shares, pushing prices up sharply. Analysts warned that the company’s fundamentals remain the same, so the rise may settle soon.
Slower US inflation has raised hopes that the Federal Reserve may cut interest rates further. US consumer prices rose 2.7 percent year-on-year in November, easing from 3 percent in September. Federal Reserve Governor Christopher Waller said the central bank can still lower interest rates if needed. A rate cut in the US could increase spending, which would help IT companies that earn a large part of their revenue from the American market.
Accenture reported strong first-quarter results, with revenue of $18.74 billion and higher new bookings, showing strong demand for its services.
The Indian rupee pared some gains to trade at 89.70 against the US dollar as of 11:30 am. A weaker rupee helps IT companies because most of their revenue comes in US dollars.
Top gainers on the Nifty IT index included Wipro and Infosys, which rose over 2 percent. HCL Technologies, Coforge, and Tech Mahindra went up more than 1 percent, while TCS gained about 1 percent. Mphasis was the only major stock to fall slightly.
Global factors, strong corporate results, and currency support have boosted confidence in the Indian IT sector, giving investors a positive start to the month.