Tech services demand may rise on upbeat statements from Fed

economictimes.indiatimes.com:

A material impact may start showing in the fiscal fourth quarter (January-March 2024) or the following three-month period (first quarter of fiscal 2025), they said.

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On Wednesday, the US Federal Reserve said it is holding its benchmark interest rate steady, extending a reprieve for borrowers after the fastest series of hikes in four decades. The central bank also indicated it expects three rate cuts in 2024.
Expectation of easing inflation and rate cuts in the US could encourage large corporations to increase tech budgets and revive mothballed projects, offering higher deal inflows for Indian IT services from their biggest market.

BSE’s Sensex index gained over 2,000 points in just two trading sessions after Fed’s commentary on Wednesday, with the infotech sector contributing 652 points of that. On Friday, shares of sector leaders Infosys, Tata Consultancy Services and HCL Technologies surged by 5-6%.

Outsourcing expert Pareekh Jain said the Fed commentary will positively impact several paused and delayed IT service programmes. «The inflation data and commentary on three potential rate cuts through the year will drive higher consumer spending and optimism among the IT clients leading to investment flow. This is likely to also benefit segments that involve investments dependent on interest rates, like digital transformation programmes that have slowed down over the past year,» Jain said.


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