Infosys, TCS to HCL Tech: Why IT stocks are skyrocketing after US Fed meeting?

Stock market today: IT stocks have been in bull trend since early morning deals. Indian IT major Tata Consultancy Services or TCS share price has surged to the tune of 2 per cent and came close to its 52-week high of 3,698.40 apiece on NSE, Infosys shares went up around 3 per cent, HCL Tech share price shot up around 3 per cent and touched a new 52-week high of 1,419.25 per share levels. Cyient shares shot up to the tune of 4.50 per cent whereas KPIT Technologies share price went up around 1.50 per cent.

According to stock market experts, US Fed meeting outcome is the major reason for rise in IT stocks today. They said that US Fed has hinted three rate cuts in the 2024, which means high interest rate cycle is over. Now, US Fed rates will be either remain unchanged or it may go down from now onwards. This US Fed’s dovish stance is expected to actuate Reserve Bank of India (RBI) to go for rate cut in upcoming MPC meeting. Hence, growth stocks are expected to come into the radar of stock market investors and hence IT stocks are witnessing buying interest today.

Trigger for IT stocks

On why IT stocks are skyrocketing today, Saurabh Jain, Vice President — Research at SMC Global Securities said, “After US Fed’s hint to cut interest rate in 2024, which means high interest rate cycle is short lived and US Fed rate cut may kickstart in the beginning of first quarter of CY24. This is going to fuel growth stocks and hence IT shares are expected to pick up momentum in short to medium term.”

On how IT companies would benefit from this US Fed meeting outcome, Avinash Gorakshkar, Head of Research at Profitmart Securities said, “US Fed rate cut would mean pressure on US dollar. This may fuel business volume of the Indian IT companies as better economic data is the major reason for US Fed’s dovish stance on interest rate. So, IT stocks may start attracting attention of Dalal Street bulls.”

However, stock experts maintained that initially IT majors would be the major beneficiary of turn around in interest rate cycle. So, one should look at buying IT majors instead of small-cap IT stocks.

Saurabh Jain of SMC Global Securities said that one should look at buying HCL Technologies shares ahead of other IT stocks as it has given positive numbers and guidance. Infosys has also given better numbers but its guidance was weak. However, TCS numbers were weak and in the wake of no guidance, I would suggest investors to go for HCL Tech shares followed by Infosys and TCS respectively.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision.

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Published: 14 Dec 2023, 11:36 AM IST

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