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A healthier US labor market is a positive signal for Indian IT firms, which generate a significant portion of their revenue from the US market.
Sensex Today (Representative/PTI File)
The Nifty IT index jumped nearly 2 per cent on November 22, driven by strong US labor market data. Initial jobless claims in the US fell by 6,000 to a seasonally adjusted 213,000 for the week ending November 16, marking a seven-month low. This suggests a potential rebound in U.S. job growth for November, following a slowdown caused by hurricanes and strikes last month.
A healthier US labor market is a positive signal for Indian IT firms, which generate a significant portion of their revenue from the US market.
At 12:15 PM, the Nifty IT index was up 1.42 per cent at 42,550, with TCS, Infosys, and HCLTech leading the gains. This marked the third consecutive day of gains for the index. After declines of 2 per cent in September and 3.7 per cent in October, the Nifty IT index has rebounded with a gain of over 5 per cent so far in November.
All ten stocks in the IT index were trading higher, with individual gains ranging from 1 per cent to 2 per cent.
Shares of midcap IT firm Mphasis were the top gainers on the Nifty IT index, rising nearly 3 per cent in early trading. The surge followed the company’s announcement as the “Official Digital Partner” of the MoneyGram Haas F1 Team. Haas Formula LLC, which operates as the MoneyGram Haas F1 Team, is a US-based Formula One team founded in April 2014 by Gene Haas, who also co-owns a NASCAR Cup Series team.
Mphasis revealed it will collaborate with the team to develop innovative solutions to enhance on-track performance and improve operational efficiency off the track.
Shares of HCLTech also attracted attention after a recent report from Morgan Stanley highlighted that the company’s US operations are well-positioned to mitigate risks from potential changes in US visa regulations, particularly if Donald Trump returns to the White House. Around 80% of HCLTech’s US-based employees are non-visa dependent, which strengthens the company’s position.
In a November 19 research note, Goldman Sachs Global Investment Research stated that revenue growth for Indian IT companies has likely bottomed out and expects an acceleration to 8% YoY growth in FY26, compared to just 1% or 4% in FY24/FY25E. The expected growth is driven by improving demand trends, deal ramp-ups, and a recovery in the small deal pipeline.
Key factors to watch, according to Goldman Sachs, include the revival of discretionary spending by enterprises, as reflected in the increase in the small deal pipeline, and the emerging monetizable opportunities from generative AI. However, the brokerage warned that prolonged macroeconomic weakness and the deflationary impact of generative AI could present risks for IT companies.
