Last Updated:
The Nifty IT index surged over 3%, emerging as the top sectoral performer amid signs of a potential Donald Trump win
IT Stocks Outperform
The Nifty IT index surged over 3 per cent, emerging as the top sectoral performer amid signs of a potential Donald Trump win in the 2024 US Presidential elections. All ten stocks within the index advanced by 1 to 4 per cent, with Infosys, TCS, and HCLTech leading the charge.
“Currently, indications suggest Trump may win again, and one of his main proposals is to impose tariffs on Chinese imports. While this might not lead to a full-scale trade war, given Trump’s pragmatic business approach, he’s likely to continue an anti-China policy. This could be advantageous for India’s exports, not just in IT but across multiple sectors,” VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
What is driving IT stocks?
Election trends show Trump taking the lead, bolstering the dollar index. A stronger dollar benefits Indian IT companies, as they generate a significant portion of their revenue in US currency while bearing most of their operational costs in Indian rupees.
Experts say the expectations of a Republican sweep in the US election is a key positive for the IT players as Trump’s policies are expected to strengthen the dollar.
“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,” said Pravesh Gour, Senior Technical Analyst at Swastika Investmart Ltd.
“Strong quarterly results from IT companies or optimistic profit expectations could stimulate purchasing interest. Another reason is that foreign portfolio investors (FPIs) may be reviving their interest in Indian IT stocks, which would raise buying pressure,” said Gour.
However, brokerage firm JM Financial believes Trump’s Presidency, while headline negative, will have limited impact on India IT Services players.
The brokerage firm pointed out that the US President has significant executive powers over immigration. The outcome of the US presidential elections will, therefore, have ramifications over the future of employment-based immigration.
However, JM Financial said Trump’s expansionary fiscal policy—cutting the corporate tax rate to 15 per cent from 21 per cent for domestic production—could be positive for IT Services demand as it eases budgetary pressures.
In September, the IT index hit a high of 43,645.9 on September 13, before undergoing a nearly 5 percent correction. However, the combination of US election results due on November 5 and expectations of rate cuts by the US Fed on November 7 are now seen as positive catalysts for IT stocks.
Disclaimer:Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.
