Why are markets rallying despite US green-card restrictions?
What's the story
The Indian stock market witnessed a major recovery on Friday, with the BSE Sensex jumping over 800 points and the Nifty nearing the 22,500 mark. The rally was led by IT stocks, as investors snapped up beaten-down stocks and IT shares gained despite concerns over US green-card restrictions targeting major tech firms.. At around 11:07am the BSE Sensex was trading at 72,377.94 after gaining over 784.70 points or nearly 1.1%. Around 10:00am it was up 804.11 points.
Sector performance
IT stocks lead market recovery
The Nifty IT index jumped 3.02% to 28,574.85 in early trade, becoming the best-performing sectoral index in the latest market snapshot.
TCS shares surged 4.98%, Infosys gained 3.07%, Wipro rose 3.23%, and Tech Mahindra advanced by a healthy 2.13%.
Other tech companies such as Coforge, Persistent Systems, Mphasis, and HCLTech also saw their shares rise significantly during this period of recovery from earlier losses due to US green-card restrictions on certain firms, including TCS and Infosys, among others.
Company responses
Companies clarify perm application status
The market rally was also supported by clarifications from companies about their limited reliance on the US Permanent Labor Certification (PERM) program.
TCS, for instance, said its PERM applications had been in single digits over the last two years and that it doesn't expect the suspension to impact its workforce strategy or customer engagements.
These reassurances seem to have eased immediate concerns among investors, even though long-term implications of these restrictions remain uncertain.
Investor strategy
Bargain buying fuels rally
Another major factor behind Friday's rally is bargain buying. After a sharp fall on Thursday, several stocks became cheaper than before, creating opportunities for investors looking to buy companies with long-term growth potential.
This strategy, known as "buying the dip," can trigger a rebound as fresh demand supports share prices.
The broader market performance indicates that buying isn't limited to IT stocks alone but extends across various sectors such as FMCG and PSU banks, among others.
Earnings impact
TCS's strong quarterly results boost sentiment
TCS's September-quarter results, announced on Thursday, also boosted sentiment toward IT stocks.
The company reported a consolidated net profit of ₹13,884 crore for Q2 FY27, up around 15% from ₹12,075 crore a year earlier. Revenue increased by 11.2% year-on-year (YoY) to ₹73,188 crore.
Its annualized AI revenue rose nearly 20% quarter-on-quarter to $3.1 billion from $2.6 billion in the July-September quarter and now accounts for over 10% of overall revenue.
Market volatility
Oil prices ease, but Brent crude remains above $100
Oil prices eased in early trade on Friday, providing some relief to markets after a recent surge.
Brent crude was down 1.31% at $102.91 per barrel, while US West Texas Intermediate crude fell 1.14% to $90.45, according to the market data available earlier in the session.
However, Brent crude remains above $100 per barrel, keeping concerns about India's import bill, inflation, and corporate costs alive.