A healthy US labor market is a positive sign for Indian IT companies, which generate a significant portion of their revenue from the US market.
The Nifty IT index rose nearly 2 percent 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 in the week ended Nov. 16, marking a seven-month low. This suggests a possible recovery in US job growth in November following a slowdown caused by last month’s hurricanes and strikes.
A healthy US labor market is a positive sign for Indian IT companies, which generate a significant portion of their revenue from the US market.
At 12:15 pm, the Nifty IT index was up 1.42 percent at 42,550, with TCS, Infosys and HCLTech leading the gainers. This was the third consecutive day of gains for the index. After falling 2 percent in September and 3.7 percent in October, the Nifty IT index has rebounded with gains of over 5 percent so far in November.
All ten stocks of the IT index were trading higher, with individual gains ranging from 1 percent to 2 percent.
Shares of midcap IT firm Emphasis were the top gainers in the Nifty IT index, rising nearly 3 percent in early trade. The jump follows the company’s announcement as the “Official Digital Partner” of MoneyGram Haas F1 Team. Haas Formula LLC, operating as MoneyGram Haas F1 Team, is a US-based Formula One team founded in April 2014 by Gene Haas. Also co-owns a NASCAR Cup Series team.
Mphasis announced that it will collaborate with the team to develop innovative solutions to enhance on-track performance and improve operational efficiency off-track.
HCLTech shares also attracted attention after a recent report by Morgan Stanley that the company’s US operations are well-positioned to mitigate risks from potential changes in US visa rules, especially if Donald Trump returns to the White House. About 80% of HCLTech’s US-based workforce is non-visa based, strengthening the company’s position.
In a November 19 research note, Goldman Sachs Global Investment Research said revenue growth has likely bottomed out for Indian IT companies and expects annual growth of 8% in FY26 compared to just 1% or 4% in FY24/FY25E. Expected growth is driven by improving demand trends, deal ramp-ups and recovery in the small deal pipeline.
According to Goldman Sachs, key factors to watch include a resurgence of discretionary spending by enterprises, reflected in an increase in the small deal pipeline, and monetization opportunities emerging from generative AI. However, the brokerage warns that prolonged macroeconomic weakness and the deflationary impact of generative AI could present risks for IT companies.