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IT stocks surged on Tuesday amid a broader rally in the Indian stock market today after US President Donald Trump announced that India and the United States have reached a trade agreement. As part of the deal, reciprocal tariffs on Indian goods will be reduced to 18%, a sharp cut from the earlier proposed 50%, significantly easing concerns for export-oriented sectors.

Persistent Systems, Coforge, Infosys, Mphasis and Oracle Financial Services Software shares emerged as the top gainers in the Nifty IT index. Heavyweights such as HCL Technologies, Tata Consultancy Services (TCS), LTIMindtree, Wipro and Tech Mahindra also recorded strong gains, driving the Nifty IT index up by nearly 6%.

The positive sentiment surrounding the India–US trade deal triggered a sharp rally across the equity markets, with the benchmark Sensex and Nifty 50 jumping about 4%. Sectors with high exposure to the US economy led the gains, as improved trade visibility boosted investor confidence.

The India–US trade deal comes on the back of the recently announced India–European Union Free Trade Agreement (FTA), further strengthening India’s external trade outlook.

Market participants believe the latest development will allow investors to refocus on the improving trajectory of corporate earnings growth. Earnings have shown sequential improvement over recent quarters, supported by a favourable revision trend.

India’s information technology companies derive a significant portion of their revenues from the US, and easing trade tensions between the two countries is expected to further lift sentiment in the sector.

Improved visibility on client spending and deal momentum from US-based customers could support growth for Indian IT firms.

All IT stocks, including Infosys, TCS, Persistent Systems, Coforge and others, stand to benefit from the India–US trade deal as sentiment revives after setbacks linked to visa-related issues and negative perceptions around outsourcing. Deal momentum from US clients is also expected to improve, Motilal Oswal Financial Services said.

For India’s IT sector derives over 50% of its revenue from North America, market expert Avinash Gorakshakar believes that this deal provides much-needed macro-predictability.

“Although, we all know, IT services are generally exempt from direct merchandise tariffs, the broader trade normalization is a major sentiment booster. The deal reduces the risk of ‘tit-for-tat’ protectionism that threatened to compress enterprise tech budgets. Regards IT stocks, they remained oblivious of the recent rally witnessed in broader markets. I see IT stocks remain fundamentally attractive,” said Gorakshakar.

He believes HCL Technologies and Tech Mahindra offer strong value on a price-to-earnings basis, while mid-cap players like eClerx Services and Mphasis appear “cheap” relative to their historical growth multiples and cash-flow generation.

The recently announced Union Budget 2026-2027 contained a few provisions relevant to the IT services industry. These include a change in the taxation policy treating buyback proceeds as capital gains. Analysts believe this is a marginal positive for shareholders and may support buyback activity in the IT sector.

“A downward revision of safe harbor margins and broader thresholds simplifies compliance, but is largely an administrative update and a tax holiday for foreign companies using data center services provided by Indian entities for providing cloud services globally makes the Indian data center ecosystem marginally more lucrative for foreign firms,” said Kotak Institutional Equities.

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