Shares of IT companies, including Infosys, Tata Consultancy Services (TCS) and Persistent Systems, fell up to 5 percent on Tuesday as investors remained cautious ahead of US President Donald Trump’s "Liberation Day" Wednesday.
The US is expected to roll out "reciprocal" tariffs, which Trump claims will match the economic burden imposed by other countries on American goods. However, details of the proposed measures remain unclear, leading to volatility in global markets.
Goldman Sachs economists anticipate Trump may impose an average 15 percent reciprocal tariff, which could impact global trade flows. The investment bank has also revised its economic projections, raising the probability of a US recession in the next year to 35 percent from an earlier estimate of 20 percent.
Market experts suggest that if the announced tariffs are lower than anticipated, markets could see a rebound, particularly in export-driven sectors such as IT and pharmaceuticals.
However, harsher measures could trigger another wave of selling pressure, said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
The Nifty IT index fell nearly 3 percent in intraday trade, with all 10 constituents trading in the red. Persistent Systems led the declines, slipping 4.5 percent to an intraday low of Rs 5,262 per share on the NSE. The stock has been under pressure for two consecutive sessions.
Infosys was down 3.36 percent at Rs 1,517.85 per share, opening with a gap-down of 2 percent.
Other IT majors, including Coforge, HCL Technologies, and LTIMindtree, declined 2.76 percent, 2.78 percent, and 2.65 percent, respectively. Heavyweights TCS and Wipro also lost up to 2 percent.
Krati Bathini, market analyst at WealthMills, warned against assuming that Indian IT companies are insulated from trade tensions. "If the US intensifies trade restrictions, spending from key clients could be impacted, which may put pressure on companies like Infosys and TCS," she said.
Trump’s April 2 ‘massive tariffs’ loom, key stocks to watch
Nuvama Research has downgraded the IT sector, citing stretched valuations and concerns over slowing growth.
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