On Thursday morning, IT stocks in India fell by as much as 7.5% because of fears that inflation in the U.S. might rise after President Donald Trump announced new tariffs. Persistent Systems saw the biggest drop, going down by 7.4% to Rs 4,921. Mphasis also took a hit, falling 4.2% to Rs 2,369.15. Other companies like Wipro, LTIMindtree, Infosys, Coforge, and HCL Technologies fell between 3% to 3.5%. Tech Mahindra’s stock dropped by 2.4%, while Oracle Financial Services Software (OFFS) went down by 2.2%.
The U.S. has placed a 26% tariff on Indian goods, changing trade rules that have been in place for over 75 years. Under these new rules, every import faces a standard 10% tariff, with extra charges for countries the U.S. believes are unfair in trade.
How This Affects India’s IT Sector
While these tariffs do not directly target the IT sector, they are expected to cause inflation in the U.S. If prices go up, American companies might spend less money, including on technology. This could hurt Indian IT firms that earn a lot from U.S. clients. An investment firm called Nuvama said that U.S. businesses might delay their tech spending for up to six months because of uncertainty around these tariffs.
Moreover, cuts in spending by government agencies like the Department of Commerce are making analysts doubt how fast the U.S. economy will grow. GDP growth predictions were adjusted downward by 0.3% since November 2024, and some experts are now expecting a negative growth rate in the first part of 2025.
The U.S. tariffs are likely to weaken the global economy even more, which is still trying to recover from the effects of the pandemic, has high debt levels, and faces ongoing global tensions.
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