Tech stocks nosedived in with the Nifty IT index plunging nearly 2% as investors rushed to offload shares ahead of a crucial economic event. Big names like TCS, Infosys, HCLTech, Tech Mahindra, and LTIMindtree were deep in the red, leading to a sharp correction in the sector.
So, what’s behind this sudden dip? Here are three major reasons shaking up the tech sector today.
The US Federal Reserve’s big decision later today
The US Federal Reserve is set to announce its latest policy decision soon, and markets are on edge. While it is widely expected that interest rates will remain unchanged, investors are more focused on what the Fed says about inflation, economic growth, and future rate cuts.
For Indian IT companies, this is something crucial. Most of their business comes from the US, and if the Fed hints at economic trouble, it could mean fewer contracts, delayed deals, and lower spending by American clients.
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Tech stocks are getting hammered because of growing concerns about a potential recession in the US. Recent data suggests that the world’s largest economy might be slowing down, which in a way, a bad news for Indian IT firms that rely heavily on American clients.
If US businesses tighten their budgets, cut back on outsourcing, or delay new projects, Indian IT companies will feel the pinch.
Weakening Dollar
Another factor hurting IT stocks is the falling US dollar. The dollar index has dropped to a five-month low, which means Indian IT companies will earn less when they convert their US revenues into rupees.
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A weaker dollar directly impacts their profitability, and since most of their income comes from overseas clients.
Stock performance – How IT companies stocks are trading
As of the current intraday trading, out of the 10 IT stocks, Tech Mahindra is down by 2.33%, LTIMindtree by 2%, TCS and Infosys by 1.7% and 1.4%, respectively. Similarly, HCLTech and Persistent Systems are trading lower by 1%,
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