Fed lowered rates by 25 bps to 4.00–4.25%, its first cut under Trump’s second term; two more cuts likely this year.
Powell called it a “risk management cut” as job growth slowed and labour markets softened.
LTIMindtree surged nearly 3%; Infosys, Wipro, Mphasis rose ~2%; HCL Tech, Tech Mahindra, Coforge, Persistent gained over 1%.
IT Stocks Surge Up To 3% As Fed's Rate Cut Sparks Optimism
Indian IT stocks rallied, pushing the Nifty IT index up 1.5% after the US Federal Reserve cut rates for the first time since 2024
IT Stocks Surge Freepik
Summary
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Shares of Indian IT companies jumped on September 18 after the US Federal Reserve cut interest rates for the first time since December 2024. The sharp rise in stock prices pushed the Nifty IT index higher, making it the top sectoral gainer in the market today.
The Nifty IT index rose 1.5% in morning trade, extending gains for the third consecutive session.
The US Federal Reserve on September 17 slashed its benchmark interest rate by 25 basis points to 4.00–4.25%, in line with market expectations. This marked the first rate cut announced by the US central bank since President Donald Trump began his second term.
More than that, policymakers also indicated two more quarter-point cuts this year, totalling 50 basis points, along with one reduction in 2026 and another in 2027. One official projected as much as 125 basis points of easing by December.
In its policy statement, the Fed said, “recent indicators suggest that growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated.” It added that “downside risks to employment have risen,” prompting the shift in policy.
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During his press conference, Fed Chair Jerome Powell described the move as a “risk management cut,” noting that the labour market has softened. “The recent pace of job creation appears to be running below the breakeven rate needed to hold the unemployment rate constant,” he said. “The labour market is softening and we don’t need it to soften anymore (and) don’t want it to.”
The rate cut in the US is expected to increase discretionary spending, which benefits Indian IT companies that derive a significant portion of their revenue from North America.
LTIMindtree shares jumped nearly 3% while Infosys, Wipro and Mphasis rose close to 2% each. Persistent Systems, HCL Tech, Coforge and Tech Mahindra gained more than 1%, while Tata Consultancy Services added nearly 1%.
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