Sterlite Technologies Ltd (STL) shares hit the 5 percent upper circuit, rising for the fifth straight session on Wednesday, while HFCL rose more than 4 percent, as investors cheered reports that the US is preparing restrictions on imports of certain Chinese data centre components.

According to a Reuters report, the Trump administration is drafting a ban on imports of new models of Chinese data centre components as part of efforts to protect infrastructure supporting the rapid expansion of artificial intelligence (AI).

STL shares hit the 5 percent upper circuit at Rs 634.65 per share on the NSE. The stock has gained more than 20 percent over the last five trading sessions.

HFCL shares rose 4.54 percent to a high of Rs 212 on the NSE. The stock has advanced nearly 14 percent over the past four sessions.

The proposed US restrictions are seen as positive for non-Chinese optical networking and fibre equipment makers, as customers may increasingly look to diversify their sourcing away from Chinese suppliers.

STL's core business is the manufacture of optical fibre and optical fibre cables, which are used to transmit internet data through pulses of light. The company is among the country's largest manufacturers of optical fibre and optical fibre cables and also has a significant presence in global markets, supplying telecom operators, governments and data centres.

HFCL operates across telecom infrastructure development, system integration and the manufacture of telecom equipment, optical fibre and optical fibre cables.

"Surging demand from AI-driven data centres, alongside three converging investment cycles -- fibre-to-the-home rollouts, data centre expansion, and 5G/6G build-outs -- has amplified the rally," Balaji Rao Mudili, Research Analyst at Bonanza, said.

The Reuters report said the US Federal Communications Commission (FCC), which oversees the country's telecom sector, is working on measures to prohibit imports of new Chinese optical transceivers. These devices enable high-speed data transmission over fibre-optic cables within data centres. The proposal is expected to be published this year, after which it would take effect.

A ban on new models of Chinese data centre devices is expected to impact China's Zhongji Innolight, one of the world's largest transceiver manufacturers. Its shares fell as much as 14 percent following the report.

Shares of US-based transceiver makers also gained after the news. Lumentum rose about 7 percent, Coherent gained 11 percent and Applied Optoelectronics advanced 18 percent.

Suppliers in the US, Europe and Japan also rallied, reflecting expectations that the proposed restrictions could weaken Chinese companies while benefiting overseas competitors.