IT stocks tumble as outlook turns hazy

Synopsis

The Nifty IT scale tumbled 4.2% - the biggest loser among assemblage indices. Shares of Persistent Systems plunged 10%, portion Coforge dropped astir 8%. TCS, Infosys, Wipro, Mphasis, LTIMindtree, and HCL Technologies declined betwixt 3% and 4%.

Mumbai: Information Technology stocks slumped by arsenic overmuch arsenic 10% connected Thursday amid renewed inflation concerns successful the US, pursuing President Donald Trump's announcement of long-anticipated reciprocal tariffs.

The Nifty IT index tumbled 4.2% - the biggest loser among assemblage indices. Shares of Persistent Systems plunged 10%, portion Coforge dropped astir 8%. TCS, Infosys, Wipro, Mphasis, LTIMindtree, and HCL Technologies declined betwixt 3% and 4%.

As portion of a sweeping overhaul of planetary commercialized policies, the US has imposed a 26% tariff connected Indian goods, replacing a strategy that had been successful spot for implicit 75 years.

Although these tariffs bash not straight interaction the IT sector, they are expected to substance inflationary pressures successful the US and higher ostentation could punctual American businesses to standard backmost spending, including cuts to exertion and IT budgets.

"While Indian IT is not straight impacted by the tariff order, 3 factors volition apt power IT spending - higher US inflation, US GDP maturation cuts, and crimping of firm profits. This, combined with uncertainty, is antagonistic for lawsuit decision-making and could effect successful a slower commencement to FY26, making a mean betterment besides challenging," said Ashwin Mehta, Head of Equity Research astatine Ambit Capital. Indian IT companies relationship for 50-70% of their revenues from the US.

Given that Indian IT firms make a important information of their gross from US clients, immoderate simplification successful tech expenditures could measurement heavy connected their maturation prospects.

Devarsh Vakil, Head of Prime Research, HDFC Securities, does not expect contiguous downgrades successful IT sector, however, believes that a cautious commentary and imaginable downgrades tin beryllium expected successful the coming months. He suggests investors to not marque drastic moves arsenic the single-digit maturation successful IT companies is already factored into their valuations. The brokerage location is maintaining a cautious stance and is underweight connected the sector.

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