IT firms lead Indian shares higher on Fed rate cut hopes

Indian shares rose in early trade on Monday, driven by gains in information technology stocks after the US Federal Reserve Chair Jerome Powell hinted at an interest rate cut next month.

The Nifty 50 and the BSE Sensex both rose 0.3% to 24,955.05 and 81,571.03 points, respectively, as of 9:49 a.m. IST.

Thirteen of the 16 major sectors gained while the broader midcaps and smallcaps advanced about 0.4% each.

Powell pointed to a possible September interest rate cut in his Jackson Hole Symposium speech on Friday, saying that risks to the job market were rising, even as he noted that inflation remained a threat and that a decision wasn’t set in stone.

This led to a rise in rate cut expectations, with traders now seeing an 84% chance of a cut in September compared to 75% before Powell’s speech.

Lower US rates make emerging markets, including India, more appealing to foreign investors.

IT companies, which get a substantial portion of their revenue from the US, jumped 2.5% and were the biggest contributors to the benchmark’s gains.

“The US rate cut should be helpful for the IT sector as it can revive technology spending, but India-US trade uncertainty is an overhang for the market ahead of the looming deadline for additional 25% tariffs,” said Anita Gandhi, founder and head of institutional business at Arihant Capital Markets.

US President Donald Trump’s additional 25% tariffs on Indian goods are set to take effect on August 27, increasing the total duties on Indian goods to a steep rate of up to 50%.

Among stocks, Yes Bank rose 2.2% after it said Japan’s Sumitomo Mitsui Banking Corporation has received the Indian central bank’s approval to buy up to 24.99% stake in the lender.