Nifty IT index fell for fourth consecutive session on September 5 with Persistent Systems, Mphasis leading the losses.
IT companies, which earn a significant share of their revenue from the US, fell up to 3%, reversing early gains as the weak labour data stoked concerns over sluggish economic growth in the United States.
At 2:20 pm on September 5, Nifty IT index was trading 1.3% lower at 34,683. In seven out of last eight sessions, Nifty IT index was trading in red even as, according to LSEG data, markets are all but certain of a quarter-point cut at the conclusion of the Fed's two-day rate-setting meeting on September 17, and price a cumulative 60 basis points of reductions this year.
US private payrolls in August increased less than anticipated, while weekly jobless claims came in higher than expected.
On September 5, Persistent Systems' shares were trading 2.9% lower at Rs 5,140 apiece followed by Mphasis and Tata Consultancy Services, which declined 2.6% and 1.9%, respectively.
Shares of Coforge were trading 1.48% lower.
Another development that is weighing on White House trade advisor Peter Navarro reposted a call on X platform from right-wing commentator Jack Posobiec urging tariffs on outsourced remote work. “All outsourcing should be tariffed. Countries must pay for the privilege of providing services remotely to the US the same way as goods,” Posobiec wrote. Navarro amplified the message with the post.
The US currently doesn’t tax services.
Navarro’s repost comes amid his recent remarks justifying President Donald Trump’s proposed 50% tariffs on Indian goods. “India is the maharaja of tariffs. They have the highest tariffs in the world. They export us a bunch of stuff. So, who gets hurt? Workers in America, taxpayers, Ukrainians,” he said.
On September 4, Posobiec reiterated his rhetoric against India at an event.
"India milks the H1-B system dry, replacing American workers in our own tech companies, undercutting wages and they're laughing all the way to the banks. That's why, President Trump is coming in with tariffs and we have to tariff every single one of these call centres, we know exactly where they are coming from. United States constitution authorises government to impose duties on any foreign commerce," he said.
Reports attributed to Bloomberg were circulated Friday, which indicated that Trump plans to impose tariffs on India's IT sector. However, Bloomberg denied the report when CNBC-TV18 reached out to it.
Another factor weighing on the sector may be the disappointing fourth quarter earnings and guidance by UK-based IT major Endava. Its fourth-quarter results fell short of market expectations, and the company also said its constant currency revenue growth in the first quarter will be a (-)6% to (-)5%.
The rapid changes in artificial intelligence systems has resulted in clients holding back their large spends, leading to slower conversions, CNBC-TV18 reported.
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