IT Stocks Rally on Strong GDP Data; Mphasis Leads Gains After Morgan Stanley Upgrade

On September 1, IT stocks jumped as Dalal Street investors were buoyed by India's remarkable 7.8% GDP growth for the June quarter. With shares increasing by around 1% to 2%, all ten components of the Nifty IT index saw positive trading. With a Morgan Stanley upgrade to an overweight rating and a revised target price of ₹3,625 per share, up from ₹3,500, Mphasis emerged as the clear favourite.

Mphasis Leads IT Rally on Morgan Stanley Upgrade

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Shares of major IT firms, including Coforge, Infosys, Tech Mahindra, Persistent Systems, TCS, and Wipro, also saw gains, reflecting growing optimism in the sector. Analysts highlighted that strong microeconomic fundamentals for Mphasis share price, combined with potential macroeconomic support from interest rate cuts, could drive further growth. Morgan Stanley expects Mphasis to narrow its valuation gap with mid-cap peers as revenue growth accelerates.

U.S. Rate Cut Hopes and Sector Outlook Boost Investor Sentiment

The IT sector has attracted renewed attention following comments by U.S. Federal Reserve Chairman Jerome Powell, who indicated that a softer U.S. job market might prompt monetary easing, possibly as soon as the Fed’s September 16–17 policy meeting. Investors view this as a potential tailwind for IT companies with significant exposure to the U.S. market.

Brokerages remain positive on the IT sector. CLSA, for example, has maintained a bullish outlook, citing resilient U.S. economic growth and signs of recovery in discretionary IT spending. The brokerage also pointed out that IT valuations remain attractive, both historically and relative to indices like the Nifty and Nasdaq, offering downside protection. Infosys and Wipro were identified as CLSA’s top picks, rated ‘Outperform’ for their high beta characteristics and strong market positioning.

Conclusion

Overall, the IT index rally reflects a combination of strong domestic macroeconomic data, sector-specific optimism, and expectations of global monetary support. Investors continue to monitor developments closely, with the upcoming U.S. Fed policy meeting and corporate earnings likely to influence short-term trends.