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Informist, Friday, Sept. 12, 2025

MUMBAI – Information technology stocks are likely to rise more next week, particularly large-cap players due to their reasonable valuations following a correction over the past few months. Investors are also waiting for the outcome of the US Federal Open Market Committee's two-day policy meeting due Wednesday for cues about the US Federal Reserve's outlook on the interest rate trajectory.

According to the CME FedWatch Tool, there is a 92.5% possibility that the US Fed will cut its benchmark interest rates by 25 basis points to 4.00-4.25% in its meeting next week and an 80% chance of another 25-bps cut to 3.75-4.00% in October. Indian IT companies have a significant exposure to the US. Many domestic players earn more than half their overall revenue from US clients. Though some believe that the worst is behind for the sector, a section of the market believes that uncertainty around tariffs could put a tight leash on US clients' IT budgets.

The Indian IT sector has been feeling the pinch of weak discretionary spending and muted earnings growth for more than a year, and the US tariffs came as an additional negative for the industry. The US' proposed bill to tax domestic companies for outsourcing services from foreign companies or individuals was another shocker.

Last Saturday, Ohio Senator Bernie Moreno introduced the Halting International Relocation of Employment, or HIRE, Bill to impose 25% tax on a US company or a taxpayer for availing paid services from a foreign national or entity. If passed, this could hurt the Indian IT sector, which provides services to various industries like banking, manufacturing, and IT in the US.

However, experts do not see the Bill getting passed as it is expected to lead to retaliation from many US companies as well as other countries. Many US giants, including Google, Apple, and Microsoft, outsource services like support, software development, and customer services. This comes at a time when some companies such as Apple have committed to make huge investments in the US amid increasing pressure from US President Donald Trump.

IT analysts said that valuations of domestic large-cap companies are currently at reasonable levels while those of mid-cap stocks are expensive. Even though mid-cap IT companies continue to outperform their larger peers in terms of earnings growth, experts said they are bullish about large-cap stocks due to the reasonable valuations.

Friday, shares of Infosys rose around 2% after the company said it will spend around INR 180 billion to buy back up to 2.41% stake or 100 million shares at INR 1,800 a share. The stock has risen almost 6% this week. All 10 constituents of the Nifty IT index gained this week, up almost 3-8%. The index closed higher after closing in the red the last two weeks.

TOP HEADLINES

* Affle 3i gets another patent in US for system to detect advertisement fraud
* TCS signs MoU with centre of advance computing for sovereign cloud ecosystem
* Infosys gets exemptive relief from US SEC regarding share buyback offer
* Infosys to spend up to INR 180 bln on share buyback via tender offer
* TCS launches chiplet-based system engineering services for semiconductor cos
* Aug MF net inflows dn 71% on mo on outflows from debt funds, shows AMFI data
* ICICI Pru Mutual Fund sells 2.02% stake in IndiaMart IndiaMesh
* SPOTLIGHT: US bill to tax outsourcing of svcs unlikely to hit Indian IT cos
* Swedish fuel co OKQ8 renews digital transformation contract with LTIMindtree
* PT Bank CTBC Indonesia deploys Infosys arm's digital banking solution
* Infosys board to meet Thu to consider share buyback
* No bar on Cognizant to use logo similar to Atyati's till HC decides suit: SC

Following are the resistance and support levels for key IT stocks for next week as per calculations based on their prices on the National Stock Exchange:

End

Reported by Anjana Therese Antony

Edited by Nishant Maher

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