Infosys, Wipro, TCS, Mphasis shares head north; here’s what’s driving the rally in IT stocks today

The shares of IT major Infosys gained as much as 4% today, riding high on the hopes that the US Federal Reserve may cut interest rate in its next cycle. Today, by 12.28 PM, the scrip was trading up 3.20% at ₹1,535.10.

Recently at the Federal Reserve's conclave in Wyoming, held annually, Chairman Jerome Powell, albeit appearing measured, remarked that employment rate in the US remains low. He also mentioned that the “policy [lies] in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.”

Not just Infosys, but other IT stocks too were trading in the green today. Infosys's rival, Wipro saw its share price gain upwards of 2.59% during intraday to trade at ₹255.09. Similarly, another IT major, Mphasis ' share price was trading north of 3%, with the scrip at ₹2,935.90. IT bellwether Tata Consultancy Services (TCS) too booked gains today, with the scrip trading about 3% higher, at ₹3,144.00. On the Nifty50 index, Infosys, TCS and Wipro were among the top gainers.

According to a report from the brokerage house JPMorgan, TCS has been upgraded to 'overweight' territory, from its previous 'Neutral,' with the brokerage house also raising its price target to ₹3,800 from ₹3,650.

As per experts, a cut in interest rate from the Federal Reserve could lead to more technology spending in the US, driving greater deal flow for Indian IT companies. However, geopolitical uncertainties, owing to the ongoing trade tensions between New Delhi and Washington, is a cause for worry, at least in the medium term.

Brokerage house Equirus Securities, just before the onset of Q1 earnings this season had warned that when it comes to Indian IT services, ongoing macroeconomic headwinds are a going concern, and will weigh on the companies' performance for a few quarters at least.