US Fed Rate Cut Buzz: Is It the Perfect Time to Buy TCS, Infosys, and Tech Mahindra Shares?

With talk of a possible US Federal Reserve interest rate cut, many are wondering if it’s a good time to buy IT stocks. This buzz comes after recent US inflation data showed a slight easing, leading to expectations that the Fed might lower rates in their next meeting. If this happens, it could be good news for Indian IT companies, as they work heavily with US dollars. Lower interest rates may boost IT spending in the US, helping these companies report better earnings in the coming quarters.

Impact of US Fed Rate Cut on IT Companies

Experts believe that a US Fed rate cut would positively impact Indian IT firms. Dr. Ravi Singh from Religare Broking explains that lower rates generally weaken the US dollar, which helps Indian IT companies that earn in dollars. A weaker dollar means they earn more when converting those dollars to Indian rupees. Additionally, lower interest rates could lead to more business investment in technology, driving demand for IT services.

What to Expect from IT Stocks

Historically, rate cuts have sometimes led to reduced demand for IT services due to economic slowdowns. But Anshul Jain, Head of Research at Lakshmishree Investment and Securities, believes this time might be different. He explains that Indian IT firms may not face the same challenges as before, and a rate cut could even lower the cost of equity, pushing up the stock prices of major IT companies. While stocks have already seen some positive gains, the full benefit of lower rates could take time to be fully realized.

Top IT Stocks to Watch

According to Anshul Jain, investors should focus on large-cap IT stocks like Infosys and Tech Mahindra. He also recommends looking at mid-cap companies such as Persistent Systems and KPIT Technologies, as these could offer good value in the current market conditions.