Indian IT stocks gained on Thursday after the US Federal Reserve cut rates by a bigger percentage than expected overnight. 

What Happened: The U.S. Federal Reserve decided to cut its benchmark interest rate by 50 basis points in a first since 2020, setting the interest rate at 4.75% and 5%.

The U.S. Federal Reserve had been on a rate hike cycle since March 2022 to curb growing inflation. 

The cut in interest rates will lower interest rates at which banks lend to businesses and customers, bringing down borrowing costs for credit cards, mortgages and loans. 

Analysts say the rate cut will spur demand for discretionary spending from U.S. companies, which will help Indian IT companies.

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Kranthi Bathini, Director of Equity Strategy at WealthMills Securities said "The Fed's rate cut is positive for IT stocks as the Fed has positive views on the US economy. It sees lesser risk for a recession in the US and confidence in the US job market. Furthermore as the interest rates take a dive, it will spur discretionary spending from US companies who are clients of Indian IT companies."

Price Action: Nifty IT index was up 1.80% to intraday high of 42,850.45.

Major IT stocks also went up.

Shares of Infosys were up 1.73% to intraday high of ₹1,924.90.

Shares of TCS gained 1.74% to intraday high of ₹4,422.20.

Shares of HCLTech rose 1.11% to intraday high of ₹1,776.

Shares of LTIMindtree surged 3.27% to intraday high of ₹6,574.95.

Shares of Wipro rallied 2.47% to intraday high of ₹551.45.

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