Indian IT stocks are outperforming broader market trends, bolstered by rising expectations of increased tech outsourcing and a stronger dollar under a potential Trump presidency. Key players like Infosys and Tata Consultancy Services have surged by 7% in November, defying a broader market slowdown. This growth is supported by improving demand from overseas clients, Trump’s potential corporate tax cuts, and a favorable currency environment, which benefits exporters. While the broader Nifty 50 index has dropped over 7% this quarter, IT stocks, including HCL Technologies and Wipro, have seen gains, reflecting investor optimism in the sector.
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The IT sector’s strong performance comes as other sectors in India face a cyclical slowdown. As foreign outflows continue and earnings in other industries weaken, investors are turning to IT stocks for stability and growth. Goldman Sachs has upgraded the sector to “overweight,” citing potential earnings upgrades and the likelihood that service exports will remain immune to potential tariffs. Seasonal trends also favor IT stocks, with the sector historically seeing strong fourth-quarter returns. Ambit analysts also highlight that the start of the Federal Reserve’s interest rate-cut cycle may further support IT stocks’ upward momentum.
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