The IT sector on Dalal Street is witnessing a strong rally, as investors are optimistic about rate cuts by the US Federal Reserve.
This surge comes amid expectations that Prime Minister Narendra Modi and US President Donald Trump could soon hold trade talks, based on their recent posts on X.
These developments are seen as positive signs for Indian IT companies, which are major exporters of technology services to global markets, including the US.
Sharp Rally in IT Stocks
Shailendra Bhatnagar from Business Today Television explained, “It’s IT and IT alone. We are seeing a very sharp rally in stocks like TCS and Infosys. Infosys is up 1.2% and TCS has added 1.5%. Smaller IT stocks such as Goforge and Persistent have also gained around 3% each. These companies have been long-term multi-baggers over the last five to seven years.”
For retail investors, Bhatnagar recommends the Nifty ITBs ETF as a simple way to gain exposure to the sector. “It includes many IT companies and is priced at about Rs 39. Given the way ETFs move when an entire sector is on an upturn, this is a sensible choice,” he said.
Domestic IT Stocks Gain Attention
Sharad Avasthi, Head of PCG Research at SMIFS, advised caution in the current environment of uncertainty. “If you want to play the IT space, Nifty ITBs is a good bet. But particularly stock-wise, considering the uncertainty from the US and the possibility of a recession if a rate cut happens, we prefer domestic IT names.”
Avasthi pointed out Orientech as a promising small-cap company. “Orientech is largely domestic in nature, and we expect the second half of the year to be much better for it,” he said.
Among larger IT firms, Avasthi recommends Wipro as a good choice. “For structural improvements, LTIM and Tech Mahindra are also solid names to keep in your portfolio,” he added.
Why the Rally Is Happening
The main driver behind this rally is growing hope that the US Federal Reserve will cut interest rates soon. Lower rates would reduce costs for global businesses and boost demand for IT services, benefiting Indian exporters.
Additionally, the expected trade talks between India and the US are raising optimism. Investors see this as a sign that tensions around tariffs and trade restrictions may ease, which would be positive for companies that depend on cross-border business.
