Indian IT stocks, including Infosys, Wipro, and LTIMindtree, are experiencing a rally, extending gains into their third consecutive session on September 18, 2025. This positive trend is largely attributed to the US Federal Reserve's recent decision to cut interest rates, which has boosted investor sentiment in the technology sector.
On September 17, 2025, even before the full impact of the Fed's decision was realized, the shares of Indian IT companies were already gaining, fueled by anticipation of a potential rate cut announcement. The Nifty IT index rose by more than 0.8% in the morning, marking its second consecutive session of gains and establishing itself as a leading sectoral gainer. Market analysts had predicted a rate cut, citing weak jobs data and mounting pressure.
The US Federal Reserve indeed cut its key borrowing rate by 25 basis points, bringing the federal funds rate down to a range of 4% to 4.25%. This move, the first rate cut of 2025, aligns with market expectations and occurs against a backdrop of stable inflation. The Fed's dovish tone has resonated well with investors, propelling the BSE IT index up by 1.5%.
LTIMindtree, Wipro, and Infosys have emerged as significant gainers in this rally. On Thursday, September 18, LTIMindtree led the surge with a 3.1% increase, while Wipro climbed 2.1%. Infosys also saw a substantial rise of 1.9%. The Nifty IT index was the top sectoral gainer, rising 1.4% in early trade, with all constituents trading positively. The IT rally was led by LTIMindtree (2.56%), Infosys (2.04%), and Wipro (1.88%).
A US rate cut is generally expected to stimulate discretionary spending, which would benefit IT firms that generate a significant portion of their revenue from the North American market. Moreover, the rate cut could lead to increased foreign investment inflows into India. Lower US rates are also expected to strengthen the rupee, ease pressure from imported inflation, and provide the Reserve Bank of India (RBI) with greater flexibility in its policy actions.
In addition to the Fed's rate cut, investors are closely monitoring developments in US-India trade relations. The resumption of direct, in-person negotiations between the two countries this week signals a potential improvement in trade relations.
