Nifty IT index slips into red as US slowdown worries weigh; Wipro, Mphasis stocks fall over 3%

The Nifty IT index fell 1.7 dragged down by Infosys, TCS, and Wipro which were down 1-3 percent.

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26 Aug, 2025 12:21

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Nifty IT emerged as the biggest loser among all 13 sectoral indices on September 4. The index fell 1.7 dragged down by frontline sectoral stocks like Infosys, TCS, and Wipro, which were down 1-3 percent. The information technology stocks were tracking a drop in Asian shares on resurgent worries of a slowdown in the United States.

On September 3, all three major US indices - S&P 500, Nasdaq Composite, and Dow Jones Industrial Average - posted substantial losses and saw their worst day since early August amid fears of a slowdown in the US economy.

Tepid US manufacturing data has spurred worries about a potential slowdown in the world's largest economy. The Institute for Supply Management (ISM) reported a rise in its manufacturing PMI to 47.2 in August from 46.8 in July. While August figure showed slight improvement, the PMI has remained below the 50 threshold for the fifth consecutive month, and has renewed concerns about a slowdown in the US economy. A decline in new orders and a rise in inventory also suggested that factory activity could remain subdued for a while.

A slew of US economic data is due this week, including readings on job openings, jobless claims and the closely-watched nonfarm payrolls report on Friday.

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Indian IT companies earn a significant share of their revenues from the US. When asked about the potential impact on the Nifty IT sector, Aishvarya Dadheech, Founder & CIO at Fident Asset Management said that impact on the Indian IT stocks is more of sentiment-driven than anything else. "The sentiment is that if the US is slowing down, IT demand may also slow down. Indian IT primarily serves the US market, so a hard landing in the US could dampen discretionary IT spending. If it's a soft landing with a rate cut, IT should do well."

In the US, major tech giants like Alphabet, Apple, and Microsoft saw their shares tumble by 2-4 percent overnight.

Back home, mid-cap IT stocks also faced downward pressure. L&T Technology Services, Persistent Systems, Coforge, and Mphasis were down 1.3-3.4 percent at around noon.

"However, I want to point out that while there will be an initial impact on IT, many institutions have IT on their top list now. With a rate cut and not a very strong landing, IT is expected to do well and could play out as a defensive strategy," Dadheech said.

Investors will await the FOMC meeting from September 17-18 and are factoring in a 63 percent chance of a 25-basis point interest rate cut by the Federal Reserve, according to the CME Group's FedWatch Tool.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.