Nifty IT Index Records Sharpest Intra-Day Rally Since 2020 on Easing US-China Tariffs and India-Pakistan Ceasefire

Investments Indian Investments

Posted by NewAdmin on 2025-05-12 09:43:59 |

Share: Facebook | Twitter | Whatsapp | Linkedin Visits: 8

---

The Nifty IT index witnessed a dramatic surge on Monday, climbing by 6.5 percent in intra-day trading on the National Stock Exchange. This marked the sharpest single-day rally for the IT sector since April 2020, when the index had soared by 8.3 percent. The rally was primarily triggered by the announcement from the United States regarding a significant reduction in tariffs on Chinese goods. The US agreed to slash tariffs from 145 percent to 30 percent for a 90-day period, which was part of a reciprocal agreement with China, who will also reduce tariffs on American imports. This temporary trade relaxation raised hopes of a positive global economic environment, boosting investor sentiment, particularly in export-driven sectors like IT.

At around 2:12 PM, the Nifty IT index was the best-performing sectoral index, outperforming the Nifty 50, which rose by 3.5 percent. Major IT stocks such as Infosys, Coforge, Persistent Systems, LTIMindtree, and Oracle Financial Services Software led the rally with gains of 7 to 8 percent. Other big players like Wipro, HCL Technologies, Tata Consultancy Services (TCS), Tech Mahindra, and Mphasis also posted strong gains in the range of 5 to 6 percent. Analysts noted that the recent ceasefire agreement between India and Pakistan also played a role in easing geopolitical tensions, thereby encouraging continued foreign institutional investor (FII) inflows, which have been consistently positive for sixteen days, barring the day of heightened conflict.

In terms of recent performance, the Nifty IT index has risen by 15 percent over the past month, compared to a 6.7 percent increase in the Nifty 50. However, year-to-date in 2025, the index is still down 12 percent, largely due to earlier concerns about a US recession and the tariff war. The benchmark Nifty 50 index, by comparison, has gained around 5 percent.

Despite the recent rally, challenges remain. The fourth-quarter results for FY25 indicated that demand for IT services continues to be under pressure due to a weak macroeconomic backdrop and cautious client spending. While margins have remained relatively stable, firms like Motilal Oswal Financial Services believe that margin improvement in the coming quarters will depend on revenue growth, operational efficiencies, and workforce optimization, although currency fluctuations could be a limiting factor.

Go!