New Delhi, Sept. 11 -- India's IT stocks are witnessing a sustained rally, with the Nifty IT index climbing 2% in one week and over 5% in a month. The uptrend reflects improving sector prospects and better earnings estimates, driven by optimism over the US economy and expectations of an India-US trade deal.

Investor confidence has also been buoyed by expectations of interest rate cuts from the US Federal Reserve. Dovish commentary from Fed Chair Jerome Powell has strengthened hopes that lower rates will ease pressure on US client budgets and support new technology spending in the coming quarters.

Currently, market participants are pricing in nearly a 100% probability of a 25-basis-point (bps) rate cut at the Fed's policy meeting on Sept...