Indian information technology stocks took a massive beating on Wednesday, March 19, as host of factors such as recessionary fears in the US and uncertainty around interest rate decisions rattled investors. The Nifty IT index fell as much as 2 percent in the afternoon trade, tracking weakness in global markets and fears of reduced demand for IT services.
At about 12:30 pm, Tata Consultancy Services (TCS) shares led the decline, slipping 2.20 percent, followed by Tech Mahindra, HCL Tech, Infosys, Wipro, Coforge, and Persistent Systems each shedding close to 2 percent.
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The selloff comes as worries about a US recession intensify, with the Federal Reserve’s ongoing monetary policy meeting adding to uncertainty. The dollar’s weakness has further fueled concerns about earnings pressure on Indian IT firms, given their heavy reliance on exports to the US market.
Overnight, Wall Street saw a sharp decline, with tech-heavy Nasdaq plunging 1.7 percent. Investors remain on edge ahead of the Fed’s policy outcome, which could influence global liquidity and impact growth-sensitive sectors like IT. Meanwhile, safe-haven demand pushed gold to record highs, underscoring the cautious sentiment prevailing across markets.
Also read: Market rebound: Why investors are wary of its sustainability
Last week, Mahesh Nandurkar, MD & Head of Research at Jefferies India in a conversation with CNBC TV-18 said that he remains cautious about the IT sector. While valuations have come off their peaks, they still sit 15-18 percent above historical averages. Investors were willing to pay a premium when the sector enjoyed strong tailwinds—a robust US growth outlook and a favorable dollar—but with these factors fading, paying a 25 percent premium no longer seems justified.
With global economic uncertainties persisting, he believes the outlook for technology stocks remains fragile, making financials the more compelling sector to own in today’s market.
At about 12:30 pm, the Nifty IT index was trading at 35,940, lower by 1.85 percent from the last close. The index has tanked over 17 percent since the start of the year. Meanwhile, the Sensex was up 156.41 points or 0.21 percent at 75,457.67, and the Nifty was up 69.45 points or 0.30 percent at 22,903.75. About 2,734 shares advanced, 780 shares declined, and 115 shares unchanged.
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