Synopsis
The Nifty IT index fell over 2% to hit a fresh 52-week low on Tuesday as lingering inflation concerns and uncertainty over the US Federal Reserve’s interest rate path weighed on sentiment. Infosys, TCS, Wipro and other IT stocks fell as much as 3% as investors awaited the sector’s first quarter earnings season.
ETMarkets.comNifty IT plunged to a fresh 52-week low as concerns over the outlook for US interest rates and a slowdown in discretionary technology spending triggered widespread selling in IT stocks.
THE A clever computer index fell more than 2% to a new 52-week low of 26,425.85 on Tuesday, as concerns about persistent inflation fueled expectations that the US Federal Reserve could raise interest rates at least three times this year.
Among individual stocks, LTI Mindtree fell about 3%, while Wipro, Infosys and Tata Consultancy Services (TCS) decreased by more than 2% each. HCL Technologies slipped about 2%, while Phase, Tech Mahindra, Coforge And Persistent systems traded with marginal losses.
Traders are now pricing in three rate cuts from the US Federal Reserve this year, with the CME FedWatch tool indicating about a 64% chance of a cut in September. However, earlier this month, the Fed’s hawkish tone fueled expectations that rates could stay high for longer, sparking concerns about weak discretionary spending and weighing on IT Stocks.
The U.S. Federal Reserve kept interest rates unchanged after its June policy meeting, but more policymakers expected borrowing rates to rise later this year amid growing concerns about inflation above the U.S. central bank’s 2% target. At the Fed’s first FOMC meeting under Chairman Kevin Warsh, the U.S. central bank acknowledged that inflation was “high relative to the committee’s 2% target,” which was attributed in part to “supply shocks that led to higher prices in some sectors, including energy.”
Also read: Infosys, TCS, Wipro and other IT stocks fall after Fed’s hawkish tone. What awaits us?
What is the impact of Fed rate hikes on IT stocks?IT stocks derive a large part of their revenue from the North American market. Rate hikes in the United States or inflation spikes in the country could impact discretionary spending in the country, which in turn could affect these businesses.
Notably, IT stocks have seen strong bouts of volatility so far this year. Earlier this year, new innovations in AI spooked investors about the possibility of disruption in India’s vaunted IT sector. The raging war in the Middle East has further dampened sentiment across the market, with IT stocks being no exception, despite brief support from the falling rupee.
Recently, these stocks saw another round of selling after Accenture’s darker outlook reignited concerns that companies remain cautious about discretionary spending on IT consulting and digital transformation projects, even as investments in artificial intelligence and cybersecurity continue.All eyes on first quarter resultsTata Consultancy Services (TCS), India’s largest IT services company, will announce its results for the April-June quarter of FY27 on July 9, kicking off the Q1 earnings season for the IT pack.
According to VK Vijayakumar, chief investment strategist at Geojit Investments, comments from the management of IT companies will be more important than the results themselves this season.
Also read: TCS to launch first quarter results on July 9, sets record date for potential dividend
(With contribution from agencies)
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(What’s moving Sensex And Clever Track latest market news, stock market advice, Budget 2025, Equity market on the 2025 budget And expert adviceon AND Markets. Additionally, ETMarkets.com is now on Telegram. For the fastest news alerts on financial markets, investment strategies and stock market alerts, subscribe to our Telegram feeds .)
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Most trending stocks: SBI share price, Axis Bank share price, HDFC Bank share price, Infosys share price, Wipro stock price, NTPC stock price
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