IT shares recover after three days as US rate cut hopes weigh

IT shares recovered after three sessions of losses on Monday on hopes that US Federal Reserve was likely to cut lending rate this month. The rate cut would boost business sentiment across the US businesses, improving business opportunities for Indian IT firms, which earn nearly 70 per cent of their revenue from export of services to the world’s largest economy. 

The BSE IT index gained after three sessions amid a rally in the benchmark indices today. The index zoomed 573 points to reclaim the 35,000 mark after two sessions on Monday. The index had ended at 34,437 on August 29, 34,765 on August 28, 35,357 on August 26 and 35,581 on August 25. 

In the current session, the index rose to 35,024 in the afternoon session. On Sensex, Infosys (2%), Tech Mahindra (1.6%), TCS (1%) and HCL Tech (0.93%) were the IT gainers. 

On BSE IT index, shares of Unicommerce Esolutions (7%), RateGain Travel Technologies (6.5%), Mphasis (5.30%), Mastek (3.44%), Genesys (3.11% and Tata Technlogies (3.03%) were the top gainers in the afternoon session today. 

However, the BSE IT index has lost 19% in 2025 and lost 19.52% in a year as Trump tariffs dampened sentiment on Dalal Street this year. 

On similar lines, Nifty Bank index too gained 362 points to hit the day’s high of 54,017 in the current session.  

The index has clocked positive returns of 5.17% in a year and gained 6.19% this year. 

Nuvama Institutional Equities has upgraded the IT sector to overweight citing (22% underperformance
since January 2025 downgrade) owing to low relative valuation/earnings gap.

Amid the global downturn due to Trump tariffs, exporters such as IT are less affected as some of the global demand weakness is offset by a weaker rupee. “Thus, it is important to note that impact of US trade deficit narrowing is not just restricted to exporters; it ripples through the economy,” said Nuvama. 

Meanwhile, brokerage Systematix has advised to hold Infosys (target price: Rs 1,644), Wipro (target price: Rs 225), HCL Technologies (target price: Rs 1,592 )and Sonata Software (target price: Rs 423). However, it has a ‘sell’ rating on Tech Mahindra with a target price of Rs 1,112 on the stock.

However, Systematix has termed Tata Consultancy Services (TCS) as its preferred stock pick within the Tier-1 IT sector, citing a strong order book and recovery in discretionary spending as factors supporting its growth.