- Nifty IT index fell 1.71% early Thursday, led by Tata Consultancy Services and Infosys declines
- Tata Consultancy Services shares dropped 1.23%, Infosys fell 2.19% on NSE amid weak market sentiment
- US Federal Reserve held interest rates but signaled a possible hike later in 2024
The Nifty IT index slumped over 1.71% in early trade on Thursday, June 18, dragged by weakness in IT heavyweights, following the overnight US Federal Reserve decision. Shares of Tata Consultancy Services, Infosys, Wipro, HCLTechnologies Ltd, and Tech Mahindra dropped nearly 1-3% after the opening bell, amid an overall weak sentiment in the domestic benchmark indices. Nifty IT fell 1.71%, the most among sectoral indices, while the Nifty Oil and Gas was little changed, down 0.02%.
Shares of India's largest IT services giant TC dropped 1.23%, while Infosys shares last traded 2.19% lower at Rs 1,132.10 apiece on the NSE. HCLTech shares traded 1.02% lower at Rs 1,154.80 while Tech Mahindra shares were down 1.37% lower at Rs 1,142.80 apiece on the NSE. Indian equity benchmarks fluctuated between gains and losses in the opening trade. The NSE Nifty 50 fell 0.1% to 24,058 after gaining 0.2% to 24,133.35. The BSE Sensex fell 0.1% to 77,066 after rising 0.2% to 77,281.
US Fed maintains status quo on interest rates
US markets fell on Wednesday and Treasury yields surged after the Federal Reserve, as widely expected, left interest rates unchanged but indicated at least one quarter-point hike could be needed later this year to rein in inflation. The S&P 500 slipped 1.2% to 7,420, the Nasdaq Composite dropped 1.4% to 26,021, and the Dow fell 1% to 51,493. Major tech bellwethers led the losses, with Microsoft, Meta Platforms, Alphabet and Amazon all closing in the red.
The two-year Treasury yield jumped more than 16 basis points to 4.216%. After yesterday's sharp decline on Fed-driven rate-hike concerns, At the conclusion of the Fed's two-day meeting, the first under new Chairman Kevin Warsh, the central bank left the target rate at 3.50-3.75%. The summary of economic projections showed several officials expect higher rates in 2026 - the median year-end fed funds estimate rose to 3.8% from 3.4% in March, implying at least one hike is likely.
ALSO READ: Warsh Era Begins: Fed Keeps Rates On Hold, Hints At Hawkish Tilt With Possible 2026 Hike
''For global equities, the message is somewhat hawkish as expectations of an early rate-cut cycle are pushed further away. This could keep bond yields high, strengthen the US dollar, and lead to intermittent risk-off sentiment in emerging markets. While interest rate-sensitive sectors may face short-term volatility, the overall market impact is likely to stay moderate since the Fed has avoided any surprise tightening,'' said Rajesh Palviya, Head of Research, Axis Direct.
''For Indian equities, the fundamental investment case remains solid, supported by resilient macroeconomic indicators, corporate earnings, sustained SIP inflows, and government-led capex. However, near-term market trends could be influenced by FII flows and currency movements, as global liquidity remains tight. Overall, any volatility stemming from the Fed's stance should be viewed as an opportunity to invest in quality businesses with a medium- to long-term perspective,'' added Palviya.
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