Nifty IT index hits fresh all-time high, rallies 7% in November so far | Stock Market News

Stock Market Today: Indian IT stocks, which ended last week with robust gains, kicked off this week on a positive note, as the Nifty IT index surged nearly 1% to hit a fresh all-time high of 43,751, surpassing its previous peak of 43,645 points set in mid-September.

As of 1:15 p.m. on Monday, November 25, the Nifty IT index was trading with a 0.26% gain at 43,444, with seven out of the 10 constituents in positive territory. Leading the gains was L&T Technology Services, up 2.9%, followed by Coforge, Wipro, Persistent Systems, MphasiS, and TCS, each rising between 1% and 3%.

Despite significant selling pressure across the broader market in November, Indian IT stocks showcased resilience, with the Nifty IT index gaining 7.46% during the month.

The rally began following Donald Trump’s victory in the 2024 US presidential election, as his proposed policies, including corporate tax cuts, sparked optimism about increased discretionary spending by US enterprises—a key revenue driver for Indian IT companies, which derive 60–70% of their earnings from the US market.

Since Donald Trump’s victory on November 5, the Nifty IT index has surged by an impressive 8.55%, underscoring heightened investor confidence in the sector’s growth prospects. This rally has been further supported by factors such as the US Federal Reserve’s rate cuts, a strong rise in the US Dollar index, and a recovery in the BFSI vertical, all contributing to the sector’s upward momentum.

However, the sustainability of the rally in IT stocks will hinge on upcoming policy decisions by the US Federal Reserve and the direction of Donald Trump’s proposed tariff plans. Concerns are mounting over the potential impact of tariffs on imported goods and the risk of an escalating fiscal deficit, which could compel the Federal Reserve to delay further rate cuts, posing a challenge for the IT stocks.

Additionally, fresh signs of US economic resilience, combined with comments from Federal Reserve officials indicating no urgency for rate cuts, have heightened investor uncertainty ahead of the December meeting.

These factors drove the US Dollar index to a two-year high last week, with the greenback gaining for the eighth consecutive week. Investors are now focused on this week’s release of the latest FOMC meeting minutes, PCE inflation data, and other key economic indicators to help shape expectations for future interest rate decisions.

Outlook for FY25 

The management teams of various IT companies continue to exercise caution regarding the near-term demand outlook, as the demand from discretionary projects remains unchanged compared to previous quarters.

However, BFSI clients in the US experienced a slight recovery in discretionary spending in 1Q. Clients’ focus is now slightly shifting away from cost-takeout deals to “high-priority” transformation deals in some pockets.

Moreover, revenue growth, utilisation, and pyramid optimisation will be key drivers for margin improvement, providing some room for margin gains in FY25. The management teams suggest that FY25 should be better than FY24. The strong deal wins, along with early signs of recovery driven by BFSI, bode well for growth in FY25, said domestic brokerage firm Motilal Oswal in its latest report.

JM Financial said, “Q2 was largely in line for IT services companies, and Q3 is shaping up as guided. Furloughs are a major headwind for IT services in Q3 and are expected to be at a similar level as last year. Improvement in BFSI was unequivocal, and for the rest, demand commentary remained status quo. All companies guided towards a softer H2 as there are no signs of demand recovery except in BFSI.”

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.