IT stocks fell up to 7.5% in Thursday's early trade after fears of inflation surround the US after President Donald Trump has finally unveiled the much-talked-about reciprocal tariffs.
The shares of Persistent Systems experienced the sharpest fall of 7.4% to their intraday low of Rs 4,921, followed by Mphasis shares, which fell by 4.2% to Rs 2,369.15 on the BSE. Meanwhile, the shares of Wipro, LTIMindtree, Infosys, Coforge and HCL Technologies tumbled between 3-3.5%.
The shares of Tech Mahindra were down by 2.4% while those of Oracle Financial Services Software (OFFS) slid by 2.2%.
The U.S. has imposed a 26% tariff on Indian goods as part of a major overhaul of global trade policies, replacing a system that had been in place for over 75 years. Under Trump’s new approach, all imports face a standard 10% tariff, with higher rates applied to countries he claims maintain unfair trade practices.
How does it impact India’s IT sector
While the tariffs imposed by Trump do not have a direct impact on the IT sector, these tariffs are seen as inflationary, meaning they could raise prices in the US
If inflation rises, US companies may cut back on spending, including reducing their technology and IT budgets. Since many Indian IT firms depend heavily on US clients for revenue, this reduction in tech spending could negatively affect their business prospects.
“US businesses are expected to delay their tech spending given the uncertainties around the Trump Tariffs. The spending could be pushed back by two quarters,” Nuvama Institutional Equities said in a note. Moreover, the cost-cutting initiatives from agencies such as DOGE and other government departments are also casting doubt on the likely GDP growth in the US, for CY25, the brokerage note said.
GDP growth projections have already been reduced by 30 basis points since November 2024, and several agencies are now predicting a negative GDP growth rate for the first quarter of CY25.
Also read: Asian stocks drop, bonds jump as Trump tariffs sap risk
The newly announced U.S. trade tariffs on Wednesday are expected to further weaken the global economy, which is still struggling to recover from post-pandemic inflation, burdened by record-high debt levels and unsettled by ongoing geopolitical tensions.
( Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
The shares of Persistent Systems experienced the sharpest fall of 7.4% to their intraday low of Rs 4,921, followed by Mphasis shares, which fell by 4.2% to Rs 2,369.15 on the BSE. Meanwhile, the shares of Wipro, LTIMindtree, Infosys, Coforge and HCL Technologies tumbled between 3-3.5%.
The shares of Tech Mahindra were down by 2.4% while those of Oracle Financial Services Software (OFFS) slid by 2.2%.
The U.S. has imposed a 26% tariff on Indian goods as part of a major overhaul of global trade policies, replacing a system that had been in place for over 75 years. Under Trump’s new approach, all imports face a standard 10% tariff, with higher rates applied to countries he claims maintain unfair trade practices.
How does it impact India’s IT sector
While the tariffs imposed by Trump do not have a direct impact on the IT sector, these tariffs are seen as inflationary, meaning they could raise prices in the US
If inflation rises, US companies may cut back on spending, including reducing their technology and IT budgets. Since many Indian IT firms depend heavily on US clients for revenue, this reduction in tech spending could negatively affect their business prospects.
“US businesses are expected to delay their tech spending given the uncertainties around the Trump Tariffs. The spending could be pushed back by two quarters,” Nuvama Institutional Equities said in a note. Moreover, the cost-cutting initiatives from agencies such as DOGE and other government departments are also casting doubt on the likely GDP growth in the US, for CY25, the brokerage note said.
GDP growth projections have already been reduced by 30 basis points since November 2024, and several agencies are now predicting a negative GDP growth rate for the first quarter of CY25.
Also read: Asian stocks drop, bonds jump as Trump tariffs sap risk
The newly announced U.S. trade tariffs on Wednesday are expected to further weaken the global economy, which is still struggling to recover from post-pandemic inflation, burdened by record-high debt levels and unsettled by ongoing geopolitical tensions.
( Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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