Indian information technology stocks fell sharply and then made a recovery during trade on Friday after an unconfirmed report said US President Donald Trump may impose tariffs on the IT industry. The Nifty IT index slumped as much as 2.3%.
The US is the biggest market for large software exporters like Tata Consultancy Services Ltd., Infosys Ltd., Wipro Ltd., and HCLTech Ltd.
Share prices of all these and many more IT companies declined immediately.
However, the tweet from a popular market handle which had wrongly been attributed to Reuters, was withdrawn and this resulted in a recovery for the IT index as shown in the graph below.
Nifty IT recovers post cracking more than 2%.
The Trump administration imposed a 50% tariff on Indian goods last month, including 25% for punishing New Delhi for importing Russian oil.
India has not retaliated to the tariffs so far, but has called them "unjustified". The two countries have been engaged in negotiations over a US-India trade deal since early this year, but those talks have been stalled.
Indian IT companies have been cautious about trade uncertainties. Despite sitting on a multi-year high order book, the sector has struggled to execute projects as clients continue to defer spending decisions in an uncertain global environment.
While the industry revenue grew 5% in dollar terms in FY25, growth is expected to slow to about 3% this fiscal year.
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