Is It Time to Buy Infosys or Persistent? Fed Rate Cut Fuels IT Stock Optimism, Says PL Capital’s Pritesh Thakkar

Mumbai | September 18 –  The Federal Open Market Committee (FOMC) lowered the benchmark rate to 4%–4.25% after its September meeting, while signalling two more cuts later this year. The move has lifted sentiment across global markets, with Indian IT stocks rallying on expectations that lower U.S. borrowing costs will translate into higher technology budgets and fresh contract flows for outsourcing firms.

Sentiment versus fundamentals

Despite the rally, demand conditions remain largely unchanged. According to Pritesh Thakkar, Vice President – Institutional Research at PL Capital, the optimism in IT stocks is sentiment-driven rather than a reflection of improving fundamentals.

“The rate cut is creating a lot of optimism in the market at a time when IT services have been on the back foot. But on-ground demand has not changed from last quarter, and management commentary suggests no meaningful revival. Budgets remain cautious, so this rally is sentiment-driven rather than demand-led,” Thakkar said.

Large-cap IT companies are still trading 15–20 per cent below their January 2025 peaks, as muted enterprise spending in the U.S. and Europe continues to weigh on revenue visibility.

Infosys and Persistent stand out

Within the sector, Infosys and Persistent Systems remain in focus. Both firms have made early bets on enterprise generative AI, which analysts believe could give them an edge in capturing incremental client budgets as companies move from experimentation to deployment.

“Investors have been aggressive on Infosys and Persistent because these two companies are at the forefront of enterprise AI adoption. They have helped clients move from the build to the run phase, creating opportunities to expand wallet share. Their valuations remain relatively inexpensive compared to peers, making the risk-reward profile attractive,” Thakkar noted.

Persistent has emerged as a preferred mid-cap play in AI-led transformation deals, while Infosys continues to strengthen global partnerships in digital and AI services.

How are IT stocks performing today?

The Nifty IT index gained over 1.5% in Thursday’s trade, making it one of the day’s top sectoral performers. As on 18^th Sep 11;45 am Most frontline IT stocks advanced in deals:

– Infosys: up 1.43% at ₹1544.10
– TCS: up 0.8% at ₹3175.40
– HCL Technologies: up 0.56% at ₹1489.80
– Wipro: up 0.92% at ₹256.50
– Persistent Systems: up 0.55% at ₹5566
– LTIMindtree: up 2.71% at ₹5570

Infosys and Persistent attracted the most aggressive buying interest, supported by their positioning in enterprise generative AI and relatively inexpensive valuations.

Outlook for the IT sector

The Fed’s dovish turn has improved sentiment across Indian equities, but the IT sector’s recovery hinges on a sustained improvement in client budgets. Until then, rallies are likely to be driven more by global liquidity conditions than by business fundamentals.

– Short term: Volatility will persist as U.S. and European enterprises remain cautious with technology spending.
– Medium term: Companies with early positioning in AI and strong execution, such as Infosys and Persistent, could benefit disproportionately.
– Valuations: Select IT names continue to trade at relatively inexpensive multiples, drawing institutional interest despite weak earnings visibility.

For now, the Fed’s rate cut has created an opportunity for selective buying, with Infosys and Persistent positioned as potential winners if AI-related demand accelerates. But a broader turnaround story for the IT sector remains elusive.