Nifty IT index fell over 7% on Monday, hitting a near 17-month low, as stock market crashed amid trade war fears. The shares of information technology services players that depend on US deals for a large proportion of their revenue saw a sharp decline.
The Nifty IT tumbled 7.74% to 30,918.95, the lowest level since November 2023. On the IT index, Coforge Ltd., Mphasis Ltd., HCL Technologies Ltd., Persistent Systems Ltd. and Infosys Ltd. led the decline as of 10:29 a.m.
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While Persistent Systems was down 10%, Coforge and Infosys were down over 9%. HCL Tech, LTI Mindtree Ltd., Mphasis and Tech Mahindra Ltd. had fallen over 8%. Tata Consultancy Services Ltd. was also down over 7% on Monday.
The IT sector's fortunes are highly linked to the US macro environment as discretionary spending by American companies drives IT services demand. A slowdown or a recession in the US, as projected by experts, will impact Indian software exporters.
While the IT sector is not directly affected by Trump's tariff order, there may be indirect impact due to slower GDP growth resulting from higher tariffs, Jefferies analysts noted. This could lead to decreased demand from manufacturing, logistics, and retail verticals, despite potential rate cuts.
This also comes as the tech stocks globally have seen a sharp decline. Taiwan's tech-heavy equity benchmark fell as much as 9.8%. The Nasdaq 100 also entered a bear market on Friday.
Expensive valuations, weak earnings, and policy uncertainties following Donald Trump's return as US President for a second term contributed to the decline.
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