Source: Mint
Mumbai, July 2, 2025 – Indian IT stocks rose sharply after optimism from the U.S. Federal Reserve hinted the Fed may entertain cuts to interest rates. The Nifty IT index increased 1.8% intraday to ₹39,519.
Top gainers were led by Infosys, which climbed nearly 3% to ₹1,649/share. Wipro rose by 2%, while Mphasis (up over 1.5%), and TCS (up over 1.5%) also contributed to the Nifty IT index gain. With 9 of the 10 companies trading in the green on the Nifty IT index, and a solid amount of buying interest was seen throughout the sector.
The IT index has shown strong performance over the last few months. In June it posted a 4.36% gain, while May reflected a 4.30% gain; demonstrating continued confidence from investors in technology stocks.
What Is Behind the Rise in IT Stocks?
The rally was sparked after Federal Reserve Chair Jerome Powell addressed a conference in Portugal. He stated that the Federal Reserve is looking at economic data before deciding on rate cuts, but did not rule out the possibility of a rate cut as early as July.
Powell also mentioned that, had it not been for the tariffs from the Trump administration that caused inflation, the Federal Reserve may have already cut interest rates. His comments gave investors optimism that rate cuts could occur fairly quickly; beneficial news for IT firms that receive a significant portion of revenues from overseas.
Possibility of Political Pressure on the Fed
Additionally, political pressure is increasing on the U.S. central bank. Earlier this week, Donald Trump reportedly sent Powell a handwritten note with interest rates from other countries. He argued, the U.S. interest rates should be lower as he claimed Powell was “too late” in taking action.
Meanwhile, Senate Republicans do have a tax and spending plan, which could increase the U.S. budget deficit by more than $3 trillion over the next ten years – no small amount. These types of developments and pressures could cause the Fed to move relatively soon.
Implications for Indian IT Firms
Indian IT firms like Infosys, Wipro and Mphasis will also benefit from a weaker U.S. dollar and global spending environment. If the Fed does decide to cut rates, it will be a positive push for their business fundamentals.
Experts pointed out that the next few months will be a real test. Investors on other hand, will focus on upcoming quarterly results, quarterly wins and industry updates pertaining to clients spending levels.
