Shares of Indian IT companies fell sharply on May 22 as global investors reacted to rising concerns over the United States’ fiscal deficit. The Nifty IT index slipped nearly 1.4 percent in early trade, as selling pressure from Wall Street spilled into Indian markets.
Investors are closely watching US lawmakers, who are currently working on a new budget proposal. This includes potential tax cuts, but there are fears that such moves could increase America’s federal deficit even further. Recently, credit rating agency Moody’s downgraded US debt, which has made global markets more cautious.
As bond yields in the US dropped due to this uncertainty, major indices like the Dow Jones and Nasdaq witnessed a decline. This trend continued in Asian markets too, with indices in Japan, South Korea and Hong Kong all trading lower.
IT stocks dominated the decline on Thursday morning in India. The top loser in the Nifty IT index has been Tech Mahindra, which declined by more than 2 percent to Rs 1,564.70 a share. Other stocks like Persistent Systems, HCL Technologies and Mphasis also dipped by over 2 percent each.
Large-cap majors such as TCS and Infosys were also not spared and dipped by over 1.4 percent each. Wipro also shed over 1 percent. LTI Mindtree and Coforge were also in the negative zone but the losses were contained.
The Indian IT industry largely relies on the US market for business. If the US economy or government finances appear shaky, investor sentiment about Indian IT companies also suffers as a result.
The industry bounced briefly over the last few weeks after showing a revival, but worldwide concerns—particularly concerning the reduction of the US credit rating and increased levels of debt—have rekindled selling. Analysts contend the volatility will persist in the short term as US economic and political uncertainty remains a key concern.
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Source: Moneycontrol
News Desk
