“A further reduction in the policy rate at the December meeting is not a foregone conclusion — far from it,” Powell said at his post-meeting press conference.
His remarks were seen as a deliberate attempt to temper market expectations, which had priced in more than a 90% chance of another quarter-point cut before he spoke. The US Fed delivered its second consecutive interest rate cut on Wednesday (October 29), lowering the benchmark rate by 25 basis points to a range of 3.75%–4% in an effort to cushion a cooling labour market.
In the morning, IT majors such as Infosys, TCS, HCL Tech, and Tech Mahindra slipped 1% each, while LTIMindtree and Persistent Systems were down 0.5 each. The Nifty IT, at about 9:40 am, was quoting at 35,933, down 0.5% from the last close. The Nifty IT index is down 17% on a year-to-date basis.
The development gains significance for the sector as companies derive a significant portion of its revenue from the US. Lower US rates reduce borrowing costs, support consumer spending, and make it easier for corporates to maintain or increase tech budgets, thereby improving the revenue visibility for Indian IT firms.
On the positive side, Cognizant marginally increased its full-year revenue guidance to be between $21.05 and 21.10 billion, and that capped the downside for IT stocks in today’s session. This translates into relatively higher growth at 6.6-6.9% YoY or 6.0-6.3% YoY in CC terms. In the previous quarter, it had estimated full-year revenue to be between $20.5-$21.0 billion, growing at 4.7-6.7%, or 4.0-6.0% in CC terms. For the fourth quarter ending December, the revenue is guided to be between $5.27 – 5.33 billion, to grow at 3.8-4.8% YoY or 2.5-3.5% in CC terms.Hit by a one-time tax outgo, US-based IT and professional services firm Cognizant Technology Solutions reported a 53% on-year (YoY) drop in net profit at $274 million for the third quarter ended September. Excluding the impact of the taxes, profit rose 18.5% while revenue exceeded the firm’s initial guidance. Net profit at the company was $582 million a year ago. Despite a fall in profit, its revenue rose 7.4% to $5.42 billion, beating its own estimates of $5.27 – 5.35 billion. The June quarter revenue stood at $5.04 billion.The next Fed Meeting will commence on December 9.
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