Infosys, TechM, and Others Climb ~2% After Powell Sparks Rate-Cut Hopes

Indian IT stocks got a boost on Wednesday, with Infosys and Tech Mahindra rising around 2%, rebounding from recent dips. What sparked the rally? US Fed Chair Jerome Powell struck a more "dovish" tone than expected in his Congressional testimony, fueling hope that interest rate cuts might arrive sooner rather than later. As a result, the Nifty IT index jumped nearly 1.7% in early trade, continuing its upward streak for the second day in a row.

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Powell’s Message: Not Cutting Yet, But Open to It

In his semi-annual address to Congress on June 24, Powell made it clear the Fed is still in "wait and see" mode. They're watching inflation closely, especially the impact of recent US tariffs. While inflation has cooled, it’s still above the 2% target. Powell warned that the price hikes from tariffs could fade quickly, or stick around longer than expected.

He summed it up with this line: “If it turns out that inflation pressures remain contained we will get to a place where we cut rates sooner rather than later.” Still, he didn’t commit to any specific timeline. Translation: the Fed’s not in a hurry, but it’s listening.

Markets React: Bonds Dip, Nasdaq Pops, IT Stocks Rally

After Powell spoke, US Treasury yields dipped and the dollar softened. Meanwhile, the Nasdaq hit a new high, signaling that investors are betting on rate cuts coming down the pipeline.

Back in India, IT stocks, heavily tied to the US market, shot up. Infosys rose 2% to ₹1,618, Tech Mahindra and LTIMindtree followed with similar gains, and companies like TCS, HCL Tech, Coforge, and Persistent Systems all notched up healthy increases of over 1%.

Top Gainers in the IT Pack

• Mphasis led the charge with a ~3% surge, trading around ₹2,753.
• Infosys and Tech Mahindra saw solid 2% gains.
• LTIMindtree wasn’t far behind, climbing by a similar margin.

The Nifty IT index stood out as one of the strongest performers of the day, riding the wave of Powell-inspired optimism.

Analysts Now Eye Earlier Rate Cuts

Powell’s tone nudged analysts to revisit their timelines. Many now expect the first US rate cut as early as July or September, with another one likely before the year ends. Before this, most forecasts leaned toward two small cuts in late 2025. So, while Powell didn’t spell out a plan, markets heard the message loud and clear: rate cuts are still on the table.

Tariffs: A Wildcard the Fed Is Watching

A big part of Powell’s message was about tariffs. He made it clear the Fed isn’t here to police trade policy, but it is watching how tariffs affect inflation. His bottom line: the Fed will act if price hikes from tariffs turn out to be long-lasting.

This careful approach reassured markets. If inflation stays under control, there’s room for the Fed to start cutting rates.

While Powell kept a cautious tone, others at the Fed seem more upbeat. Governors like Christopher Waller and Michelle Bowman hinted last week that rate cuts might start in July, especially if inflation from tariffs stays muted.

Even so, Powell’s keeping the door open for different scenarios, depending on how the data shapes up in the coming weeks.

Powell’s facing heat from political corners. Former President Trump recently slammed him online, calling him “very dumb” for not cutting rates faster. But Powell stood his ground, defending the Fed’s independence and its focus on long-term inflation control.

Why It Matters for Indian IT

For companies like Infosys, TCS, and Tech Mahindra, the US is their biggest market. Lower US interest rates tend to boost business spending and tech investments, great news for Indian IT. So when the Fed hints at rate cuts, it often translates to stronger demand and better earnings for these firms.

While IT stocks are stealing the spotlight, other sectors like metals and real estate haven’t fared as well. With inflation and trade uncertainty still lingering, investors are watching the US closely. American monetary policy continues to cast a long shadow over Indian equities.

What’s Next?

First Rate Cut? July’s still possible, but September is looking more likely.
Tariffs Watch: The next few months of inflation data will be crucial.
Fed Meeting Alert: The big one to watch is July 29–30.

Analysts at Angel One pointed out that the Fed’s internal projections suggest up to 50 basis points in rate cuts this year. But they also warned that uncertainty around tariffs could still throw things off course.

Powell didn’t promise a rate cut, but he opened the door wider than expected. That’s all it took for markets to rally, especially in the IT space. For Indian tech giants, the message is clear: a friendlier Fed boosts business.

Now, all eyes are on inflation data and the Fed’s next move. If the trends hold, we could see even more momentum for Indian IT and beyond.