Indian IT stocks witnessed a major sell-off on Monday morning, with the Nifty IT index plunging 7% in early trade, mirroring the global market turmoil and intensifying concerns over the U.S. economic outlook. The sharp decline came as investors reacted to fears of slowing sales growth in the tech services sector, which heavily relies on U.S.-based clients for revenue.
Leading the losses on the Nifty 50 were major IT firms such as Infosys, TCS, and HCL Technologies, with Infosys alone dropping 10% at market open. Mid-cap IT players like Mphasis and Coforge also faced significant pressure, shedding between 6% and 9%.
The sell-off follows rising apprehension over potential tariff implementations, which could hit IT service exports to the United States. With deal inflows from American clients already under strain, analysts expect the revenue streams for Indian IT companies to take a hit in the coming quarters.
Adding to investor anxiety, U.S. President Donald Trump addressed recent stock market declines, stating that while he doesn’t welcome market losses, corrective measures are sometimes necessary. “I don’t want anything to go down. But sometimes you have to take medicine to fix something,” Trump remarked, downplaying the significance of the nearly $6 trillion wiped off U.S. equities last week.
The global risk-off sentiment has extended into this week, with major indices across the world experiencing steep losses. Futures on the S&P 500 dropped 4.31%, while Nasdaq futures slumped 5.45%. Asian markets also reflected the pessimism, with Japan’s Nikkei down 7.8%, South Korea’s benchmark shedding 4.6%, and both Hong Kong’s Hang Seng and Taiwan’s index tumbling 10%.
Brokerage firm Morgan Stanley has flagged emerging macroeconomic and technological shifts as rising threats to the Indian IT sector. These changes could adversely affect growth expectations and lead to a downward revision in stock valuations.
Over the past month, the Nifty IT index has already declined 6%, with a 20% drop recorded over the last six months. The broader downtrend has erased crores in investor wealth, reflecting a shift in market sentiment towards the tech sector amid global uncertainty and U.S.-centric risks.
As investors seek safer assets, the outlook for Indian IT remains clouded by international developments and policy actions in key export markets.
