Newsletter
Indian IT stocks logged out of Tuesday’s market rally.
The Nifty IT index fell 2.3%, making it the day’s worst-performing sector. Infosys, TCS, Wipro, HCLTech and Tech Mahindra declined by as much as 3% as investors reconsidered the sector’s growth prospects. Weakness across the broader market added to the pressure.
First, Anthropic IPO: the IPO itself does not directly take business away from Indian IT companies. Instead, it has put the global AI boom and the threat it poses to traditional technology services back under the spotlight.
Second, Crude oil enters the chat: India imports most of the crude oil it uses. When oil becomes more expensive, the country must spend more dollars on those imports.
There is a risk-off mood in which investors often sell stocks across sectors even companies that may benefit slightly from a weaker currency.
Third, US Fed: US is the biggest market for most large Indian IT companies. Their clients include American banks, retailers, manufacturers, healthcare companies and technology firms.
If US interest rates stay high, borrowing remains expensive for these businesses. Companies may then postpone optional technology projects, reduce consulting budgets or demand better prices.
