Nifty IT Up 3%; TCS, Infosys Among Many Lead The Pack
Despite uncertainty surrounding the US Presidential elections, IT stocks gained with full swing in today’s trading session.
Nifty IT Up 3%; TCS, Infosys Among Many Lead The Pack
Despite uncertainty surrounding the US Presidential elections, IT stocks gained with full swing in today’s trading session. The gains were majorly led by stocks of Persistent Systems, LTIMindtree, TCS, Infosys and Wipro, HCL Tech and Tech Mahindra, which jumped between 3-4 per cent. While Nifty IT index was up by 3%, all the 10 components of IT pack are trading in green.
As of now, Donald Trump has been projected as a winner in states including Kentucky and Indiana. He is already leading in 19 US states as compared to Kamala Harris who is leading in three states. Early trends report of a Republican victory in the hotly contested presidential elections. Reportedly, Trump has won the key battleground state of Georgia.
Why are the IT stocks gaining?
As per the early trends, the possibility of a Republican victory is driving the dollar index in the upward direction. Notably, a stronger dollar benefits Indian IT companies as they earn a significant proportion of their revenue in US currency. The Trump-led government is a positive indicator for the IT majors as the strength of the dollar is set to get bolstered.
Pravesh Gour, Senior Technical Analyst at Swastika Investmart Ltd said, “Given their significant presence in the US market, IT companies may benefit from a rebound in US equities following the Republican sweep in the US elections, which is one of the major factors behind today's gain.”
On the other hand, JM Financial took a cautious stand by pointing out that the results can have severe consequences over the future of employment-based immigration. The US President has a lot of control over immigration.
It added that cutting the corporate tax rate from 21% to 15% can be beneficial to IT companies as it eases budgetary pressures.
Sagar Shetty, a research analyst at StoxBox, said investors are keeping an eye on the US election as it could set tone for the upcoming policy changes.
Notably, the US non-manufacturing Purchasing Managers' Index (PMI) rose to 56.0 in October as compared to 54.9 in September, a more than 2-year high
On the account of upcoming rate cut expectations and improving employment status, the US economy is likely looking forward to being on track. The combination of similar factors will help in stemming higher discretionary spending by clients in the coming quarters, Shetty added.