Why IT Stocks Down Today? Know the Reasons

IT stocks took a hit today, with Nifty IT falling 2.56% to 39,504.85, making it the worst-performing sector. Major IT companies saw losses, with Wipro dropping 3.53%, Infosys dropping 3.33%, TCS dropping 2.30%, LTIMindtree dropping 3.87%, Mphasis dropping 3.59% and L&T Technology dropping the most by 4.31% as of 01:27 PM on February 24.

Several factors contributed to this decline, including economic concerns in the US, foreign investor outflows, and uncertainty around tariffs.

US Inflation Data and Economic Slowdown

New US inflation data showed higher-than-expected figures, leading to concerns about an economic slowdown. This affected investor sentiment, with many shifting towards safer assets like gold.

• The University of Michigan’s consumer sentiment index dropped by nearly 10% to 64.7 in February.
• US home sales fell more than expected, reaching 4.08 million units.
• The US services purchasing managers’ index (PMI) moved into contraction territory.

These indicators suggest that businesses in the US might reduce discretionary spending, including IT services, which directly impacts Indian IT companies.

Foreign Institutional Investors (FIIs) Selling Continues

FIIs have been selling Indian equities for months. In February, FIIs sold ₹36,977 crore worth of stocks, and January saw even higher outflows of ₹87,375 crore. Out of 15 trading sessions in February, FIIs were net sellers in 13.

If this trend continues, February will be the fourth straight month of consistent FII selling. This impacts market liquidity and puts additional pressure on IT stocks.

Tariff Concerns and Weak Deal Momentum

As per the news reports, uncertainty around potential US tariffs remains a concern for Indian IT firms. There is still no clarity on the impact of trade restrictions, but it continues to create uncertainty.

At the same time, the news reports say that there are signs of weak deal ramp-ups in the IT sector for Q4 FY24. Companies are cautious about spending, which slows the growth outlook for IT services.

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