Rate cuts in Europe keep Indian IT sector's hopes up
technology budgets soon as Europe has started reducing interest rates and the US is expected to follow suit.
While industry analysts foresee this as a tailwind along with the ongoing digital adoption by enterprises, they said the impact on the industry may be felt only by the fourth quarter of this fiscal ending March 2025.
«We think the first change will reflect in the management commentary turning more optimistic and references to green shoots in discretionary demand pickup,» said Kumar Rakesh, associate director at BNP Paribas, who closely tracks the IT sector. «Impact on earnings will likely take a little longer and we think it will start reflecting in CY2025.»
The European Central Bank's second interest rate cut last week signalled a declining path for borrowing costs in Europe, providing lending support for consumers and enterprises in the months ahead.
Further, the US central bank is expected to follow suit with its first interest rate reduction in over four years since 2020 at its meeting this week.
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