US Fed rate cut hopes, India–US trade talks boost IT stocks; Infosys, Tech Mahindra among top picks

India’s IT stocks are witnessing a sustained rally, with the Nifty IT index climbing 2% in one week and over 5% in a month. The uptrend reflects improving sector prospects and better earnings estimates, driven by optimism over the US economy and expectations of an India–US trade deal.

Investor confidence has also been buoyed by expectations of interest rate cuts from the US Federal Reserve. Dovish commentary from Fed Chair Jerome Powell has strengthened hopes that lower rates will ease pressure on US client budgets and support new technology spending in the coming quarters.

Currently, market participants are pricing in nearly a 100% probability of a 25-basis-point (bps) rate cut at the Fed’s policy meeting on September 17, 2025, with the likelihood of a 50-bps cut at about 70%. Experts believe this could set the stage for stronger deal activity and better growth visibility for Indian IT exporters.

“The US Fed is likely to cut rates by 25-bps to stimulate the slowing US economy. This can improve tech spending by the US corporates, which, in turn, will be beneficial to Indian IT exporters,” said Dr VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.

Also Read | OFSS, Persistent and others gain up to 10% as US Fed rate-cut hopes rise

Echoing similar optimism, Mohit Gulati, CIO and Managing Partner at ITI Growth Opportunities Fund, said that Indian IT companies appear well-placed for stronger growth and improved margins ahead, provided global trade tensions don’t flare up again. “The fundamentals remain intact for the sector to outperform, especially as the rupee appears to have bottomed out,” he noted.

At the same time, some caution prevails. Vijayakumar added that despite the optimism, uncertainty in the global trade and economic environment could limit growth. “At best, the revenue of Indian IT companies will grow by 4–6%,” he said.

Also Read | Infosys, Wipro to Coforge: IT stocks lift Nifty IT index by over 2%

Midcap IT Stocks Vs Largecap IT Stocks

Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities expects large-cap IT stocks, such as Infosys and Tech Mahindra, to lead the first leg of the sector’s rally, as institutional investors typically favor liquid and defensive stocks when allocating fresh capital.

“Mid-cap IT companies, while likely to remain more volatile, are expected to gain momentum in the medium term as growth visibility improves and investor appetite for higher-beta names strengthens,” Tapse said.

IT Stocks to Buy

Tapse has identified Infosys and Tech Mahindra as his preferred picks in the IT sector.

Infosys | Target Price: ₹1,575 | Stop Loss: ₹1,495

Infosys share price is consolidating near support with strong buying interest. A move above ₹1,535 can accelerate momentum toward ₹1,575. RSI indicates steady strength, and risk is limited with a stop-loss at ₹1,495, making it an attractive buy opportunity, Tapse said.

Tech Mahindra | Target Price: ₹1,575 | Stop Loss: ₹1,499

Tech Mahindra share price shows resilience near current levels, supported by strong volumes. Tapse believes sustaining above ₹1,520 keeps the momentum bullish toward ₹1,575. A breakout is likely if buying continues.

He recommends traders to consider fresh entry in Tech Mahindra shares for a target price of ₹1,575 apiece, with ₹1,499 stop-loss to protect downside risk.

Also Read | Infosys share price: Should you buy IT stock ahead of share buyback?

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.

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