The Nifty IT index has entered bear market territory after a sharp decline, falling over 21 percent from its peak. The recent drop of nearly three percent in a single trading session has led to a significant erosion of wealth, wiping out approximately Rs 8.4 lakh crore in market capitalisation.
Nine out of the ten stocks in the Nifty IT index have now entered the bear market, as investors continue to sell their holdings. LTIMindtree has suffered the most, with a 34 percent decline, while Infosys and TCS have dropped around 24 percent from their highs. The fall in TCS alone has led to a market value erosion of Rs 3.8 lakh crore, while Infosys has lost Rs 1.7 lakh crore in capitalisation.
Wipro is the only stock in the index that has not plunged into the bear market, having fallen by about 17 percent, still a correction, but not a bear market. LTTS and Coforge, also, have fallen by lesser percentages, losing Rs 15,000 crore and Rs 16,000 crore, respectively, from their 52-week highs.
The IT stocks’ decline has been prompted by global uncertainty, specifically apprehensions about the economic policies in the US. The tariff announcements made by US President Donald Trump have made investors anxious, and this has led to speculation about economic slowdown. This has caused a global stock market meltdown, with the S&P 500 having lost $4 trillion in market capitalization. As the Indian IT industry is highly dependent on the US market for revenue, this uncertainty has affected investor sentiments negatively.
According to a Morgan Stanley report, macroeconomic developments and sudden technological changes subject the Indian IT sector to increasing risks. The brokerage firm has reduced target prices for several IT stocks, citing potential challenges in revenue growth and valuation. Infosys has been affected the most by rating downgrades.
As the global volatility persists, the Indian IT industry can expect more challenges, affecting the growth opportunities and investor sentiments.
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Source: Moneycontrol.
News Desk
