The Nifty IT index surged over 3% on Wednesday, fuelled by growing expectations of a Donald Trump win in the upcoming US Presidential election. Investors rallied behind the IT sector, pushing stocks like Infosys, TCS, and HCLTech higher, as all ten stocks in the index rose between 1% and 4%. By mid-morning, the Nifty IT index was up 3.3% at ₹41,754.80, showing a recovery from the declines it experienced in September and October.
Impact of Trump’s potential win on the IT sector
Market analysts believe that a Trump victory could mean a renewed focus on anti-China policies, which could boost India’s exports, particularly in the IT sector. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, explained, “Trump is likely to push for tariffs on Chinese imports if re-elected. While a trade war might be avoided, his stance could still benefit Indian sectors reliant on exports, especially IT.”
This sentiment has ignited interest in share market investment within the IT segment, as investors expect increased demand for Indian IT services from US businesses looking to diversify their supply chains.
Recovery from recent declines
IT stocks had been under pressure after Capgemini, a global IT leader, revised its revenue growth forecast downward for the current year. Capgemini now expects its revenue to decline by 2-2.4% in constant currency, a sharper decline than the 0.5-1.5% initially projected.
This news, coupled with rising competition, contributed to recent losses in the Nifty IT index. The index had seen a nearly 5% correction after hitting a high of ₹43,645.9 in September. However, today’s uptick reflects optimism surrounding the potential for increased share market investment in IT companies should the Trump administration return to power.
Upcoming US events seen as positive catalysts for IT stocks
The upcoming US election results on November 5, along with anticipated Federal Reserve rate cuts on November 7, are being viewed as potential catalysts for the IT sector. “With the US still addressing critical challenges in banking, healthcare, and manufacturing, IT project spending is expected to rise, which bodes well for Indian IT firms,” stated Rishubh Vasa, Research Analyst at Indsec Securities & Finance. Many investors believe that the combination of these events could trigger further gains in the IT index, making it an attractive avenue for share market investment.
Growth outlook for Indian IT firms in the US market
The US remains an essential market for Indian IT companies, with growth expectations tied to rising client budgets and project spending. “We’re seeing promising signs of increased IT budgets for 2024, particularly in sectors like healthcare and banking, where digital transformation initiatives are just starting to accelerate,” added Vasa.
Although growth in emerging technologies may be gradual, as data infrastructure is still in development, pilot projects in areas such as Generative AI could begin to materialise in the coming months. By June 2025, industry experts anticipate more substantial investments in IT assignments, enhancing the sector’s appeal for share market investment.
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