As anticipation builds for next week’s Federal Reserve meeting, experts suggest that a potential aggressive interest rate cut could drive significant gains in rate-sensitive sectors, including information technology (IT). With many IT stocks currently priced attractively, analysts are focusing on mid-cap IT stocks in particular. Market expectations have shifted towards a possible 50 basis point rate cut, up from the previously anticipated 25 basis points. In light of this, analysts recommend considering Oracle Financial Services Software (OFSS) and LTIMindtree as top picks.
IT Stocks in Focus
Prashanth Tapse, Senior Vice President of Research at Mehta Equities, highlighted the potential for IT stocks to outperform if the Federal Reserve announces a 50 basis point cut. Given recent US economic data, the market is preparing for a more aggressive Fed rate cut cycle in the coming months. IT stocks, which are currently available at discounted prices, may see substantial gains. While other sectors like banking, real estate, and auto are also poised for attention, mid-cap IT stocks are expected to lead the rally,” Tapse said.
Investment Recommendations
Before the Fed meeting, Tapse advises investors to focus on two mid-cap IT stocks: OFSS and LTIMindtree.
LTIMindtree (LTIM) Stock Outlook
Sumeet Bagadia, Executive Director at Choice Broking, provided insights on LTIMindtree’s stock performance. “LTIMindtree is currently trading at ₹6,416.2, showing a strong upward trend with a pattern of higher highs and higher lows. The immediate support level is at ₹6,231, which aligns with the 10-day Exponential Moving Average (EMA) and indicates historical buying interest. Investors might find a good entry point around ₹6,333. Should the stock surpass ₹6,444, it could target ₹6,666. For a cautious approach, consider buying on dips at ₹6,333 with a stop-loss at ₹6,231, aiming for targets up to ₹6,666,” Bagadia recommended.
OFSS Stock Outlook
Regarding Oracle Financial Services Software (OFSS), Bagadia noted, “OFSS is currently trading at ₹12,261.9. The stock’s weekly chart suggests a favorable outlook, with a potential for a sustained upward movement. Recent consolidation patterns indicate that the stock may break above the ₹11,000 to ₹11,450 range. Investors who bought at lower levels should consider using trailing stop-loss orders near ₹11,180, close to the 20-Day EMA, to protect gains and manage risk. For fresh investments, the current market price or dips around ₹11,777 could offer good entry points. A strict stop-loss at ₹11,180 will help mitigate potential losses,” he concluded.
As the market awaits the Fed’s decision, these IT stocks present opportunities for investors looking to capitalize on anticipated rate cuts.