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Economic Times
12 hours ago
- Business
- Economic Times
IT stocks up 35% in less than 2 months. Can it withstand Fed caution and geopolitical risk?
Fed Pushes Back on Rate Cuts Live Events Geopolitical Risks Tariff Threats Outlook (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel After a sharp sell-off earlier this year, Indian IT stocks have delivered a striking comeback. The Nifty IT index has surged 10.5% in under two months, with several individual stocks posting even stronger gains. But with global headwinds intensifying—from a cautious US Federal Reserve to rising geopolitical tensions—the sustainability of this rally is now in question. Coforge has rallied nearly 35%, while Tech Mahindra and LTIMindtree are up 28% each. Persistent Systems Oracle Financial Services Software (OFSS), and Mphasis have posted gains of 16% to 22%. Even large-caps like Infosys and Wipro delivered double-digit returns in the same the rebound is starting to face resistance. Following the US Fed 's June policy meeting, the Nifty IT index slipped nearly 1%, signalling renewed caution among Federal Reserve kept its benchmark rate unchanged in June but raised its core PCE inflation projection—its preferred inflation measure—from 2.8% to 3.1% for 2025. Headline PCE is now expected to reach 3%, up from earlier estimates, indicating that price pressures are proving persistent.'The Federal Reserve's decision to hold interest rates steady comes as no surprise, given the persistent inflationary pressures in the U.S. economy,' said Suresh Darak, Founder, Bondbazaar. 'These pressures were... exacerbated by global conflicts pushing up oil prices and sustaining inflation.'At the same time, US GDP growth expectations have been revised down to 1.4%, raising concerns about delayed tech spending by large clients. 'Growth and inflation outlook is at loggerheads at this moment,' said Vaqarjaved Khan, Senior Fundamental Analyst at Angel One. 'Markets are interpreting this tone as somewhat hawkish.'With only one rate cut now likely in FY26, Indian IT companies that rely on US enterprise spending may see continued pressure on deal as rate uncertainty builds, global tensions are driving a fresh spike in oil prices. Over the last week, conflict between Iran and Israel has intensified, and there are fears that the US may get involved. Iran's Supreme Leader has threatened to block the Strait of Hormuz, a vital passage for nearly 20% of the world's oil shipments, while US President Donald Trump has hinted at a more aggressive US a result, Brent crude prices jumped more than 18% to $79, while WTI rose 18.5% to $75.7 over just seven trading Indian IT firms, a prolonged oil rally could lead to higher inflation globally, currency volatility, and tighter tech budgets for energy-sensitive risks are also back in focus as the US heads toward its presidential election. Fed Chair Jerome Powell recently warned that 'tariff effects on inflation can be persistent,' sparking concern for Indian IT exporters that depend on stable global trade flows.'Going forward, if the US Fed delivers a 50-bps rate cut in 2025, it would increase liquidity in the global markets,' said Khan. 'However... Middle East tension and tariff-related announcements by the US... could increase inflation expectations globally. If any of these risks play out at a larger extent, the upside scenario in Indian equities might get halted.'The recent 35% rally in IT stocks has been driven in part by easing attrition, improving margins, and hopes of a demand revival. But with the Fed turning cautious and geopolitical risks rising, the sector's near-term trajectory looks uncertain.'Jerome Powell's comment that 'despite heightened uncertainty, the economy is in solid position' is important. However, he has warned that 'tariff effects on inflation can be persistent'... With only 1.4% GDP growth expected this year, the US is unlikely to attract a lot of capital flows,' said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit IT names like LTIMindtree and Tech Mahindra dropped over 3% in a single session on June 19—reflecting the sector's sensitivity to global IT index's sharp bounce from its early-2025 lows shows that investors remain optimistic about long-term fundamentals. However, the path forward is likely to be sticky inflation, oil-driven macro risks, tariff uncertainty, and a cautious Fed, the sector's recovery rally faces real tests. Whether the momentum can continue—or gives way to another round of selling—may depend on how these risks evolve over the next quarter.: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)
Time of India
12 hours ago
- Business
- Time of India
IT stocks up 35% in less than 2 months. Can it withstand Fed caution and geopolitical risk?
Coforge has surged nearly 35%, with Tech Mahindra and LTIMindtree each rising 28%. Persistent Systems, HCLTech, Oracle Financial Services Software (OFSS), and Mphasis have recorded gains between 16% and 22%. Even large-cap players like Infosys and Wipro have delivered double-digit returns during the same period. Tired of too many ads? Remove Ads Fed Pushes Back on Rate Cuts Tired of too many ads? Remove Ads Tariff Threats Tired of too many ads? Remove Ads Outlook After a sharp sell-off earlier this year, Indian IT stocks have delivered a striking comeback. The Nifty IT index has surged 10.5% in under two months, with several individual stocks posting even stronger gains. But with global headwinds intensifying—from a cautious US Federal Reserve to rising geopolitical tensions—the sustainability of this rally is now in question. Coforge has rallied nearly 35%, while Tech Mahindra and LTIMindtree are up 28% each. Persistent Systems Oracle Financial Services Software (OFSS), and Mphasis have posted gains of 16% to 22%. Even large-caps like Infosys and Wipro delivered double-digit returns in the same the rebound is starting to face resistance. Following the US Fed 's June policy meeting, the Nifty IT index slipped nearly 1%, signalling renewed caution among Federal Reserve kept its benchmark rate unchanged in June but raised its core PCE inflation projection—its preferred inflation measure—from 2.8% to 3.1% for 2025. Headline PCE is now expected to reach 3%, up from earlier estimates, indicating that price pressures are proving persistent.'The Federal Reserve's decision to hold interest rates steady comes as no surprise, given the persistent inflationary pressures in the U.S. economy,' said Suresh Darak, Founder, Bondbazaar. 'These pressures were... exacerbated by global conflicts pushing up oil prices and sustaining inflation.'At the same time, US GDP growth expectations have been revised down to 1.4%, raising concerns about delayed tech spending by large clients. 'Growth and inflation outlook is at loggerheads at this moment,' said Vaqarjaved Khan, Senior Fundamental Analyst at Angel One. 'Markets are interpreting this tone as somewhat hawkish.'With only one rate cut now likely in FY26, Indian IT companies that rely on US enterprise spending may see continued pressure on deal as rate uncertainty builds, global tensions are driving a fresh spike in oil prices. Over the last week, conflict between Iran and Israel has intensified, and there are fears that the US may get involved. Iran's Supreme Leader has threatened to block the Strait of Hormuz, a vital passage for nearly 20% of the world's oil shipments, while US President Donald Trump has hinted at a more aggressive US a result, Brent crude prices jumped more than 18% to $79, while WTI rose 18.5% to $75.7 over just seven trading Indian IT firms, a prolonged oil rally could lead to higher inflation globally, currency volatility, and tighter tech budgets for energy-sensitive risks are also back in focus as the US heads toward its presidential election. Fed Chair Jerome Powell recently warned that 'tariff effects on inflation can be persistent,' sparking concern for Indian IT exporters that depend on stable global trade flows.'Going forward, if the US Fed delivers a 50-bps rate cut in 2025, it would increase liquidity in the global markets,' said Khan. 'However... Middle East tension and tariff-related announcements by the US... could increase inflation expectations globally. If any of these risks play out at a larger extent, the upside scenario in Indian equities might get halted.'The recent 35% rally in IT stocks has been driven in part by easing attrition, improving margins, and hopes of a demand revival. But with the Fed turning cautious and geopolitical risks rising, the sector's near-term trajectory looks uncertain.'Jerome Powell's comment that 'despite heightened uncertainty, the economy is in solid position' is important. However, he has warned that 'tariff effects on inflation can be persistent'... With only 1.4% GDP growth expected this year, the US is unlikely to attract a lot of capital flows,' said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit IT names like LTIMindtree and Tech Mahindra dropped over 3% in a single session on June 19—reflecting the sector's sensitivity to global IT index's sharp bounce from its early-2025 lows shows that investors remain optimistic about long-term fundamentals. However, the path forward is likely to be sticky inflation, oil-driven macro risks, tariff uncertainty, and a cautious Fed, the sector's recovery rally faces real tests. Whether the momentum can continue—or gives way to another round of selling—may depend on how these risks evolve over the next quarter.: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)
Time of India
10-06-2025
- Business
- Time of India
Bank fixed deposits lose sheen! Post RBI rate cut, investors pick high-yielding corporate bonds; here's why
Bank fixed deposits lose sheen! Retail investors seeking enhanced returns from fixed-income portfolios are increasingly gravitating towards corporate bonds offering higher yields. Tired of too many ads? go ad free now This shift has intensified following the Reserve Bank of India's (RBI) reduction in repo rates by one percentage point since February, leading to decreased bank fixed deposit rates. These investors are focusing on state-guaranteed securities, NBFC bonds, and small finance and microfinance bonds, which provide superior returns compared to traditional bank deposits. State Bank of India's fixed deposits with 2-3 years tenure offer maximum returns of 6.7%, whilst state-guaranteed bonds from Telangana, Uttar Pradesh, Kerala and Andhra Pradesh, with 2-4 years tenure, yield returns between 9-10%. Various retail websites offer these bonds with a minimum investment requirement of ₹10,000. These platforms, known as Online Bond Platform Providers (OBPP), are SEBI-registered entities facilitating electronic bond transactions, according to an ET report. Corporate Bonds: What's On Offer Platforms such as Indiabonds, Bondbazaar, Grip Invest and Wint Wealth are experiencing increased trading activity. One platform reported doubled trading volumes in the current quarter compared to July-September 2024. Another platform witnessed a tenfold increase in new registrations compared to the previous year. Also Read | "Direct investments in bonds can typically offer an additional return of 3-5 percentage points over traditional fixed deposits," said Bondbazaar founder Suresh Darak according to the ET report. Several NBFCs and MFI bonds with AA or lower ratings from organisations like Muthoot Capital, MAS Financial, and Edelweiss Financial could potentially deliver returns of 10-12%. Tired of too many ads? go ad free now Financial advisers suggest creating a diversified portfolio of these bonds instead of concentrating investments in a single bond, whilst favouring shorter durations of 2-3 years. "Investors may consider two-, three-year bonds, which balance yield potential with visibility on credit risk and interest rate movements," said cofounder Vishal Goenka. He notes that the risk-free curve has steepened at the short to medium end with maturity of 2-3 years, making this segment attractive for those looking for better risk-adjusted returns without committing to long tenures. Also Read | "Diversify across issuers, tenures and ratings. Do not invest more than 10% in a single issuer, investing across one to three years helps manage reinvestment and interest rate risk and diversification ensures a risk-adjusted fixed-income portfolio," said Darak of Bondbazaar. Wealth managers recommend that investors monitor the company's financial performance and leadership history when purchasing high-yield bonds, considering their elevated risk levels. They advise limiting exposure by acquiring modest quantities of these bonds. (Disclaimer: Recommendations and views on the stock market and other asset classes given by experts are their own. These opinions do not represent the views of The Times of India)
Economic Times
10-06-2025
- Business
- Economic Times
Retail investors shift focus to high-yield corporate bonds for better returns
Agencies Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Mumbai: Mumbai: Retail investors on the lookout for higher returns from their fixed-income portfolios are turning towards high-yielding corporate bonds. This has gathered pace after the Reserve Bank of India (RBI) cut repo rates by as much as a percentage point since February, which is forcing bank deposit rates are eyeing state-guaranteed papers, NBFC bonds and small finance and microfinance bonds , which give higher returns than bank deposits. These bonds are available through many retail websites where investors can buy them for as little as ₹10,000. These are Online Bond Platform providers (OBPP), SEBI registered platforms that facilitate buying and selling bonds are using platforms like Indiabonds, Bondbazaar, Grip Invest and Wint Wealth among others to buy these bonds, with volumes growing on these platforms. Traded volumes on one of the platforms doubled this ongoing quarter compared with July-September 2024 quarter. At another, there is 10-fold growth in signups now compared with a year earlier."Direct investments in bonds can typically offer an additional return of 3-5 percentage points over traditional fixed deposits," said Bondbazaar founder Suresh Darak. While a fixed deposit from State Bank of India can offer a maximum of 6.7% for a deposit with a tenure of 2-3 years, state-guaranteed bonds from Telangana, Uttar Pradesh, Kerala and Andhra Pradesh with a tenure of 2-4 years could offer yields of 9-10%.In addition, some NBFCs and MFI bonds rated AA or lower are available from Muthoot Capital , MAS Financial, Edelweiss Financial and could potentially offer 10-12% managers believe investors should build a portfolio of these bonds, rather than putting all their money in a single bond, and opt for shorter tenures of 2-3 years."Investors may consider two-, three-year bonds, which balance yield potential with visibility on credit risk and interest rate movements," said cofounder Vishal Goenka. He believes the risk-free curve has steepened at the short to medium end with maturity of 2-3 years, making this segment attractive for those looking for better risk-adjusted returns without committing to long tenures."Diversify across issuers, tenures and ratings. Do not invest more than 10% in a single issuer, investing across one to three years helps manage reinvestment and interest rate risk and diversification ensures a risk-adjusted fixed-income portfolio," said Darak of managers advise investors to keep a track of the financials of the company and the management's track record while buying high-yielding bonds, given that they carry higher risk. Investors should spread their risk by buying a small quantity of these bonds, they said.
Time of India
10-06-2025
- Business
- Time of India
Retail investors shift focus to high-yield corporate bonds for better returns
Agencies Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Mumbai: Mumbai: Retail investors on the lookout for higher returns from their fixed-income portfolios are turning towards high-yielding corporate bonds. This has gathered pace after the Reserve Bank of India (RBI) cut repo rates by as much as a percentage point since February, which is forcing bank deposit rates are eyeing state-guaranteed papers, NBFC bonds and small finance and microfinance bonds , which give higher returns than bank deposits. These bonds are available through many retail websites where investors can buy them for as little as ₹10,000. These are Online Bond Platform providers (OBPP), SEBI registered platforms that facilitate buying and selling bonds are using platforms like Indiabonds, Bondbazaar, Grip Invest and Wint Wealth among others to buy these bonds, with volumes growing on these platforms. Traded volumes on one of the platforms doubled this ongoing quarter compared with July-September 2024 quarter. At another, there is 10-fold growth in signups now compared with a year earlier."Direct investments in bonds can typically offer an additional return of 3-5 percentage points over traditional fixed deposits," said Bondbazaar founder Suresh Darak. While a fixed deposit from State Bank of India can offer a maximum of 6.7% for a deposit with a tenure of 2-3 years, state-guaranteed bonds from Telangana, Uttar Pradesh, Kerala and Andhra Pradesh with a tenure of 2-4 years could offer yields of 9-10%.In addition, some NBFCs and MFI bonds rated AA or lower are available from Muthoot Capital , MAS Financial, Edelweiss Financial and could potentially offer 10-12% managers believe investors should build a portfolio of these bonds, rather than putting all their money in a single bond, and opt for shorter tenures of 2-3 years."Investors may consider two-, three-year bonds, which balance yield potential with visibility on credit risk and interest rate movements," said cofounder Vishal Goenka. He believes the risk-free curve has steepened at the short to medium end with maturity of 2-3 years, making this segment attractive for those looking for better risk-adjusted returns without committing to long tenures."Diversify across issuers, tenures and ratings. Do not invest more than 10% in a single issuer, investing across one to three years helps manage reinvestment and interest rate risk and diversification ensures a risk-adjusted fixed-income portfolio," said Darak of managers advise investors to keep a track of the financials of the company and the management's track record while buying high-yielding bonds, given that they carry higher risk. Investors should spread their risk by buying a small quantity of these bonds, they said.
