Revitalization of Indian IT Sector Anticipated in 2025 as Economic Conditions Improve
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New Delhi, Jan 6 (NationPress) The macro-economic landscape for the Indian IT sector has greatly improved compared to the previous two years, which is expected to catalyze a revival in 2025, as stated in a report published on Monday.
The anticipated Fed rate cuts are no longer just aspirations but are actively being implemented, inflation seems to be manageable, and with the recent US elections concluded, the new administration is perceived as favorable for businesses, according to the 'India IT Services 2025' report by BNP Paribas India.
“Among the notable trends identified by the BNPPE Equity Strategy team for 2025 that could benefit the Indian IT services sector are the strength of the dollar, the process of inventory restocking, and consumer-centric retail themes,” explained Kumar Rakesh, an analyst specializing in IT and Auto.
The Fed is reducing rates while markets are already performing well, a situation historically viewed as bullish for the market, as highlighted in the report.
Furthermore, the Republican majority suggests that additional fiscal easing may be on the horizon. US consumer confidence remains strong, and the outlook for enterprise capital expenditures is improving.
“We interpret all these factors as advantageous for Indian IT Services. It is uncommon for Nifty IT to underperform in a year when both earnings growth and margins are on the rise – a plausible scenario for 2025,” Kumar remarked.
The Global BNPPE sector rating for Technology has been elevated to 'Overweight' from 'Neutral'.
“We regard the Indian IT Services sector as one of the few investment options in India that aligns with the US monetary and fiscal easing cycle that is accessible to domestic investors. However, key risks to monitor include Trump’s tariff strategies, their effects on inflation, and the Fed’s commitment to rate cuts,” the report stated.
“Despite valuations appearing high, the sector’s earnings per share (EPS) outperformance and the strong relationship between anticipated EPS growth and price-to-earnings (P/E) ratios provide reassurance regarding the valuations of our O/P-rated stocks,” it concluded.
