Indian IT stocks are trading under pressure on September 17, after the US Federal Reserve raised interest rates by 25 basis points, taking its benchmark rate to 3.75%-4%. The move marked the Fed's first rate hike in more than three years and came with signals that borrowing costs could rise further.
Among individual stocks, HCL Technologies fell 1.29%, followed by Tech Mahindra at 1.17%, TCS at 1.12%, Wipro at 0.91% and Infosys at 0.80%.
Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better Pay
The Nifty IT index was down 0.77% at 28,862.70 in early trade. The index touched an intraday high of 29,022.50 and a low of 28,805.40. On the monthly chart, Nifty IT is down 7.29%, from a high of 31,496.70.
Why are IT stocks falling today?
1. Fed signals higher-for-longer rates
The Fed's 25-basis-point hike was accompanied by a more cautious outlook on future rates. Reuters said the move and the indication of further increases could reduce investor appetite for emerging markets and put pressure on sectors such as IT, which generate a significant share of revenue from the US.
Higher interest rates also tend to weigh on valuations of growth-oriented technology companies as the cost of capital rises. Following the decision, the US 10-year Treasury yield moved above 5%.
2. Weak US market cues
US equities ended lower after the Fed decision, with the Dow Jones falling 1.21% and the S&P 500 declining 0.45%. The weakness in global technology and risk assets has added to pressure on Indian IT counters.
3. IT sector already has its own worries
The Fed is not the only overhang. Indian IT companies are facing concerns around muted client spending and AI-driven changes to the traditional software-services model.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
