Why IT stocks are rising today ahead of US Fed policy decision

Small-caps and mid-caps rose about 0.9% each, while all but one of the 13 major sectors logged gains.

Indian shares opened higher supported by gains in US interest rate-sensitive IT stocks ahead of the US inflation reading and the Federal Reserve's updated rate projections. The NSE Nifty 50 index was up 0.5% at 23,384.20 and BSE Sensex 0.5% to 76,861.94. The Nifty 50 rose as much as 0.65% to a record high during the session. Small-caps and mid-caps rose about 0.9% each, while all but one of the 13 major sectors logged gains.

Stock Market today: IT companies, that count the US as a key revenue geography, jumped 1.25% today.

Avinash Gorakshakar, head of research at Profitmart Securities, said that as the newly elected government set up and cabinet portfolios were distributed, the market is now factoring in some broad budget expectations.

Why are IT stocks rising today?

IT companies, that count the US as a key revenue geography, jumped 1.25% today. It is widely expected that US headline consumer price inflation has eased last month but a stronger-than-expected jobs report raised the prospect of inflation remaining sticky. Odds of a Fed rate cut in September have fallen to 56%, from 78% a week ago, and the focus will be on policymakers' updated "dot plot" and comments on how soon cuts could begin.

This comes as India's inflation is expected to have picked up to 4.89% last month suggesting the Reserve Bank of India is still months away from starting to cut rates. The rate-sensitive financials rose 0.4% while inflation-sensitive consumer stocks dropped 0.37% to be the only sector in the red.