US Labour Data Boosts Indian IT Stocks

The Indian IT sector saw a significant boost on Monday, with stocks jumping as much as 4% intraday, driven by softer labour data and benign inflation in the US. This development has triggered hopes of a policy rate cut in January, which could bring down borrowing costs and boost tech spending.

Market Performance

The Nifty IT index climbed 820 points or over 2% in the day's trade, witnessing its fourth straight rally in a row. Out of the 10 stocks in the index, 9 traded with gains, with Persistent Systems being the top gainer, soaring 4%. Infosys, Wipro, and Tech Mahindra also saw significant gains, with Infosys and Wipro gaining nearly 3%, and Tech Mahindra up 2%.

Impact on IT Companies

The likelihood of a rate cut in the US is expected to bring down borrowing costs and trigger tech spending by companies. This could have a positive impact on the Indian IT sector, which has seen a decline in recent times. The Nifty IT index is still 10% lower on a one-year basis, with only two stocks, LTIMindtree and Persistent Systems, managing to remain positive in this period.

Other stocks, including HCL Technologies, Tata Consultancy Services (TCS), Oracle Financial Services Software (OFSS), and LTIMindtree, saw gains ranging from 1.5% to 0.22%. However, Mphasis was the lone loser, down 0.6%.

Expert Insights

According to experts, the labour market softening and inflation moderation have strengthened expectations of Federal Reserve easing in 2026. However, it is also possible that the low inflation reading may prove temporary, and the figure could normalize higher once data gathering processes resume.

Remember, this is a perspective, not a prediction. It's essential to do your own research and consider multiple factors before making any investment decisions.