IT Stocks Face Profit Booking Ahead of US Fed Rate Decision: Here's Why
The IT sector witnessed a sharp sell-off on Wednesday, with the Nifty IT index declining by 3.05%. MphasiS led the decline, dropping 5.6%, followed by other major players like L&T Technology Services, Persistent Systems, and Tata Consultancy Services.
It StocksUs Fed Rate DecisionProfit BookingNifty It IndexGeojit Financial ServicesReal Estate NewsSep 18, 2024
The sell-off in IT stocks is primarily due to profit booking by investors following a strong rally in recent months. Since June, the Nifty IT index surged by 32%, closing positive for three consecutive months. Investors, now seeking to lock in gains, are taking profits ahead of the US Federal Reserve's expected rate decision on Wednesday, September 18.
The anticipation of a potential rate cut by the US Fed, driven by easing inflation and a cooling labour market in the US, has contributed to this profit-taking. The IT sector slump weighed on the broader market, with key players like Infosys, TCS, HCL Tech, and Tech Mahindra dragging down the Nifty 50 index. However, support from financial stocks helped prevent steeper losses in the overall market.
Hareesh V, Head of Commodities, Geojit Financial Services, said, “There are expectations of a 25-50 basis point cut in rates in today’s meeting.” “The recent economic releases from the US do not suggest a super-sized rate reduction but signs of waning economic activity could push the US central bank to act aggressively to support the economy,” he added.
About Geojit Financial Services Geojit Financial Services is a leading financial services company in India, providing a range of services including brokerage, distribution of financial products, and portfolio management.
The IT sector decline is a significant development in the Indian stock market, and investors are closely watching the US Fed's rate decision to gauge its impact on the market. Geojit Financial Services is a subsidiary of C J George & Sons Pvt Ltd, a Kerala-based business group with interests in tea plantations, hospitality, and financial services.
Frequently Asked Questions
Why did IT stocks face profit booking on Wednesday?
The sell-off in IT stocks is primarily due to profit booking by investors following a strong rally in recent months.
What is the expected outcome of the US Fed's rate decision on September 18?
There are expectations of a 25-50 basis point cut in rates in today’s meeting.
How did the IT sector decline impact the broader market?
The IT sector slump weighed on the broader market, with key players like Infosys, TCS, HCL Tech, and Tech Mahindra dragging down the Nifty 50 index.
What is the current trend in the Indian IT sector?
The Indian IT sector has witnessed a strong rally in recent months, with the Nifty IT index surging by 32% since June.
Who is Hareesh V, and what is his take on the US Fed's rate decision?
Hareesh V is the Head of Commodities at Geojit Financial Services, and he expects a 25-50 basis point cut in rates in today’s meeting.
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