Nifty IT Rallies 1% as Nvidia’s Strong Q1 and US Court Ruling Boost Sentiment
On May 29, the Nifty IT index surged nearly 1 percent, snapping a two-day losing streak, and emerging as the top sectoral gainer. The rally was driven by two key global developments: strong Q1 results from Nvidia and a US court ruling against Trump-era reciprocal tariffs. These positive triggers helped revive investor confidence in the IT sector, which is heavily dependent on the US market for revenue.
US Court Blocks Trump Tariffs
The US Court of International Trade, based in Manhattan, ruled that former President Donald Trump had exceeded his constitutional authority by imposing broad tariffs:
- The court stated that the Constitution grants Congress the exclusive power to regulate foreign commerce, not the Executive branch.
- A three-judge panel emphasized that the issue was not the merit of tariffs, but that federal law does not authorize such executive actions.
Although the Trump administration has filed a notice of appeal, the ruling temporarily halts the implementation of these tariffs, easing concerns for export-heavy sectors like Indian IT services.
Nvidia’s Exceptional Q1 Performance
The rally was further supported by Nvidia’s Q1 earnings, which surpassed expectations despite ongoing geopolitical trade tensions:
- The company posted a 69% year-on-year revenue growth, reaching $44.1 billion.
- Net income rose by 26% YoY, hitting $18.78 billion, underlining Nvidia’s robust business model.
- Nvidia reported a $4.5 billion charge linked to reduced demand for its H20 chips after the US government restricted exports to China.
- Despite this, the company’s performance reassured markets about the resilience of the global tech sector.
These results lifted investor sentiment globally, pushing up Wall Street futures, with S&P 500 up 1.5% and Nasdaq rising nearly 2% in early trade.
Impact on Nifty IT Constituents
Following these developments, Indian IT stocks saw a strong recovery during intraday trading on May 29:
- LTI Mindtree led the gains, rising nearly 3% to trade at ₹5,229 per share, reflecting renewed investor interest.
- Persistent Systems and Coforge climbed close to 2%, supported by positive sectoral sentiment.
- Heavyweight Infosys advanced around 1.5%, while Mphasis and Tech Mahindra gained about 1% each.
- Wipro and TCS also traded in the green, though with marginal gains, contributing to the overall sectoral uplift.
These movements suggest that IT stocks, previously pressured by tariff concerns and recession fears, are now regaining strength.
Outlook for IT Sector
The rebound in the Nifty IT index signifies renewed optimism in the technology segment, buoyed by global catalysts:
- The court’s ruling, if upheld, may provide long-term relief for companies exporting to the US.
- Strong tech earnings, such as those from Nvidia, help validate the underlying growth potential of digital and AI-driven services, where Indian IT firms have growing exposure.
With ongoing global trade and tech developments, the sector is likely to remain sensitive to macroeconomic cues, but recent events suggest a favorable shift in investor sentiment.
