From Fed rate cut decision to FPI outflows: 5 key things to know before market opens on Monday

The shares of Indian IT companies gained in trade on December 5, pushing the Nifty IT index higher up in the green to extend gains for the third consecutive session. This comes amid rising expectations of a rate cut by the US Federal Reserve.

The Nifty IT index gained around 301 points (0.8 percent) to 38,661.95, as seen at 2.45 pm. The index has emerged as one of the top sectoral gainers today.

Fed rate cut hopes:

Despite initial expectations of a no rate cut, a higher probability of a December rate cut by the US Federal Reserve has been boosting global markets. The American central bank is now expected to reduce its key interest rate by a quarter-percentage point during its FOMC meeting scheduled from December 9-10, a Reuters poll of over 100 economists found.

"I'm expecting the Fed will cut at the meeting next week. I know there's been a lot of back and forth especially after October about Powell being somewhat hawkish, but that, I think, was more about a lack of available data due to the shutdown," said Thomas Simons, chief US economist at Jefferies.

Fed Governor Christopher Waller recently said that the American job market is weak enough to warrant another quarter-point rate cut in December. Earlier, New York Fed President John Williams, a permanent voter on rate policy and vice chair of the rate-setting Federal Open Market Committee, said that interest rates can fall "in the near term".

"I view monetary policy as being modestly restrictive...Therefore, I still see room for a further adjustment in the near term to the target range for the federal funds rate to move the stance of policy closer to the range of neutral," Williams said.

How Fed's rate cut decision impacts Indian IT companies?

A rate cut in the US is expected to increase the discretionary spending limit, which in turn benefits IT companies which derive a significant portion of their revenue from the North American market.

Top IT gainers today:

HCL Technologies shares jumped nearly 2 percent to trade at Rs 1,682.90 apiece. Mphasis and Infosys shares rose more than 1 percent each.

Wipro, Persistent Systems and Tech Mahindra shares were nearly 1 percent, while Coforge, LTIMindtree and Tata Consultancy Services (TCS) shares were trading in the green with marginal gains.

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Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.

The equity benchmarks recovered from early losses on Friday, with the Sensex climbing over 500 points from the day’s low and the Nifty moving above 26,100, as sentiment improved after the Reserve Bank of India (RBI) announced a policy rate cut.

The market had opened on a volatile note amid continued foreign fund outflows and mixed cues from overseas markets.

At around 10:55 a.m., the Sensex was up 196.89 points or 0.23 percent to 85,462.21, while the broader Nifty advanced to 26,093.60, up 59.85 points or 0.23 percent.

Bajaj Finance, Infosys and Shriram Finance were among the top gainers in the Nifty50 pack, rising up to 2 perent, while InterGlobe Aviation and Hindustan Unilever declined up to 3 percent.

Key factors behind market rise

1) Policy rate cut: RBI’s Monetary Policy Committee (MPC) voted unanimously to reduce the policy rate by 25 basis points to 5.25 percent. A rate cut eases borrowing costs for companies and consumers, which is seen as supportive for economic activity and often lifts equity sentiment.

2) Rupee rises: The rupee strengthened 20 paise to 89.69 against the US dollar in early trade, after touching record low in previous session. A firmer domestic currency can help reduce import costs.

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3) Crude declines: Brent crude slipped 0.17 percent to USD 63.15 a barrel. Softer crude prices tend to ease inflationary pressures and lower input costs for several sectors, providing an additional boost to the market.

4) Firm global cues: Asian markets were mostly firm, with South Korea’s Kospi and Shanghai’s SSE Composite trading in the green. US stocks ended on a flat note overnight.

5) India Vix declines: The India VIX, a measure of market volatility, fell 2.29 percent to 10.57. A lower reading is usually associated with improved risk appetite among investors.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.

The IT shares extended their gains for a second straight session on Thursday, outperforming a volatile broader market. The Sensex and Nifty moved sharply in both directions throughout the day, but IT stocks held firm.

The Nifty IT index rose around 1.5 percent in afternoon trade, after closing more than 1 percent higher on Wednesday. The index is up over 2 percent in the two sessions.

All 10 constituents of the Nifty IT index were trading in positive territory. Coforge led the pack, gaining 3.19 percent around 1:30 p.m., followed by Persistent Systems, which was up 1.96 percent.

TCS shares were quoting at Rs 3,230.40 per share on the NSE, up 1.58 percent - the higest in about 3 months. The sharp uptick was seen after ET reported that OpenAI is in advanced talks with the company to establish a large-scale AI compute presence in India and co-develop agentic AI products for enterprises.

Mphasis, Tech Mahindra, HCL Technologies, Wipro and Infosys also advanced, rising up to 2 percent.

3 Key Factors behind Rise in IT Sector

1) Weakening rupee: The rupee declined 28 paise to a record low of 90.43 against the US dollar in early trade. The domestic currency opened at 90.36 and slipped further amid sustained foreign fund outflows. A weaker rupee typically benefits IT exporters, which earn a large share of their revenue in dollars. The depreciation boosts their reported earnings and margins in rupee terms.

2) Expectations of a US rate cut: Fresh US economic data kept hopes alive for a Federal Reserve rate cut next week. Lower rates in the US tend to support economic activity and corporate spending, including technology budgets. Improved client spending in the world’s largest IT market generally benefits Indian IT services companies.

Sensex falls 400 pts from day's high, Nifty below 26,000: 5 key reasons behind market decline

3) Positive brokerage commentary: Motilal Oswal said the IT services sector could be nearing an inflection point, with stronger growth expected over the next 6–9 months. The brokerage projected a pickup in the second half of FY27 and broader adoption through FY28 as enterprises move from pilot projects to full-scale deployment. It added that sector valuations remain at decade lows despite stable profitability, reported Informist.

Last week, the firm upgraded Infosys to “buy” from “neutral”, citing its potential to benefit from enterprise AI spending. Mphasis and Zensar were also raised to “buy”, while Wipro was revised to “neutral” from “sell”.

The brokerage expects IT services growth to stabilise and strengthen by FY28 as cloud spending normalises. The IT sub-index remains down 12.7 percent year-to-date, compared with the Nifty 50’s performance.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.

The equity benchmarks gave up gains in a highly volatile session on Thursday as profit-booking pulled the indices off their intraday highs. The Sensex slipped about 250 points from its peak, while the Nifty fell below 26,050 during the session.

The Sensex opened on a weak note, declining 156.83 points to 84,949.98. The Nifty too eased 47 points to 25,938.95. Both indices later recouped losses, with the Sensex trading 369.80 points higher at 85,476.62 and the Nifty at 26,096.25, up 110.25 points.

InterGlobe Aviation, Dr. Reddy's Laboratories and Kotak Mahindra Bank were among the major laggards in the Nifty50 pack, declining up to 2 percent, while Tata Consultancy Services and Tech Mahindra Limited were the top gainers, rising up to 2 percent. Market breadth remained negative as about 1765 shares advanced, 1848 shares declined and 151 shares unchanged.

Key factors behind market decline

1) Rupee under pressure: The rupee fell 28 paise to a fresh low of 90.43 against the US dollar in early trade. A weakening currency typically dampens market sentiment as it prompt foreign investors to turn cautious.

2) Sustained FII selling: Foreign Institutional Investors offloaded equities worth Rs 3,206.92 crore on Wednesday, marking the fifth straight session of outflows. Persistent selling by overseas investors has continued to put pressure on domestic equities.

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3) Caution ahead of RBI policy: The Reserve Bank of India’s Monetary Policy Committee will announce its policy decision on Friday. With growth staying strong and the rupee weakening, investors are unsure whether the central bank will signal any shift in its stance.

"Investors are focused on the RBI’s policy call and tone," Kranthi Bathini, Director of Equity Strategy at Wealthmills Securities told Reuters.

Adding to the cautious mood, Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, said "Nifty slipped below the 26,000 mark yesterday, extending its losing streak to a fourth straight session with market breadth firmly favouring the bears. A sliding rupee and persistent FII outflows continue to weigh on sentiment, while upcoming RBI and Fed policy decisions and geopolitical developments could add fresh volatility."

4) Weekly expiry: Volatility picked up as traders squared off positions on the weekly derivatives expiry, leading to frequent swings between positive and negative territory.

5) Firm crude prices: Brent crude rose 0.35 percent to USD 62.89 per barrel. Higher crude prices tend to unsettle domestic markets as they can push up import costs and impact inflation expectations.

Technical view

Anand James, Chief Market Strategist at Geojit Financial Services, said the Nifty’s attempt to recover appeared to have paused near the 26,000 mark. "A phase of consolidation may be required before a move towards 26,111 or a break above 26,200,” he said. “However, a fall below 25,935 could confirm a resumption of the downside."

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.

Indian IT companies, led by TCS, Persistent Systems and Coforge are extending their gains after the currency made another record low of 90.42 against the US Dollar on Thursday, December 4.

Shares of Coforge are the top gainers on the Nifty IT index, with gains of nearly 2%, while TCS, Wipro, Mphasis and Tech Mahindra have also seen gains between 1% and 2% in early Thursday trading.

For the week so far, shares of Wipro, Mphasis, TCS, Tech Mahindra and LTIMindtree are up between 2% to 2.5% each, while those of Infosys, HCLTech and Coforge have also gained between 1% to 2%.

Weakness in the currency is generally a positive for the margins of these IT companies, as majority of their topline comes from the North American market.

In recent updates, analysts tracking the sector have highlighted that the focus of AI will shift from building infrastructure to software, applications and data engineering. This step, according to the analysts, will unlock more AI revenue over the next 12-18 months.

A consensus estimates of analysts expects mid-single-digit earnings growth expectations for the full year. This, along with a 4% to 5% dividend yield, makes it attractive to look at these stocks, a handful of analysts wrote in their recent reports.

Shares of Coforge are the top gainers on the Nifty IT index, currently up 2%, along Wipro, Persistent and Mphasis, which are up between 1.5% to 2% today. All stocks on the Nifty IT index are trading with gains. The Nifty IT index is currently 18% off its all-time high levels, which the index had surged to in December last year.

(With Inputs From Reema Tendulkar)