The Indian stock market saw IT stocks under pressure on November 18, with top names such as Tech Mahindra, Infosys, and Wipro posting declines. This dragged the Nifty IT index down for the third session in four days, reflecting a cautious sentiment among investors.
Market Performance Today
The Nifty IT index fell over 1 percent, hitting an intraday low of 36,001.90. IT shares were among the biggest losers alongside select metal and realty stocks.
- Tech Mahindra (TechM) slipped nearly 2%
- Infosys and LTI Mindtree declined over 1%
- Wipro, HCL Tech, and Mphasis dropped close to 1%
- TCS and Persistent Systems traded with marginal losses
Key Reasons Behind IT Stocks' Weakness
Several market dynamics influenced the downturn in IT shares today:
- Reduced Chances of US Fed Rate Cut
- Federal Reserve policymakers increasingly signal a hold on further rate cuts.
- Market expectations for a 25 basis-point cut in December fell to 46%, down from 50% earlier this week, according to CME Group’s FedWatch tool.
- A Fed rate cut typically boosts discretionary spending in North America—a key market for Indian IT firms. Reduced expectations for rate cuts may have dampened investor sentiment.
- Global Concerns Over AI Investments
- Recent large-scale stake sales in AI-focused tech companies stirred fears of an AI bubble peaking.
- Indian IT companies, while increasing investments in AI-driven tools, could face cautious investor reactions amid global tech market jitters.
- Wall Street and major Asian indices showed declines: Nasdaq fell nearly 1%, South Korea's Kospi over 3%, and Shanghai Composite above 1%.
- Awaiting Key US Economic Data
- Investors are closely watching delayed US reports, including the September jobs data, following the longest US federal government shutdown this year.
- Since Indian IT firms generate a substantial portion of their revenue from the US, any macroeconomic uncertainty impacts market sentiment.
- Profit-Booking After Recent Gains
- After a strong 5% rally over three sessions in mid-November, IT investors booked profits, contributing to the current correction of more than 2% in the Nifty IT index.
Company-Specific Performance
The fall in IT shares was widespread but varied in intensity:
- Tech Mahindra (TechM): Near 2% decline
- Infosys: Over 1% drop
- Wipro: Approximately 1% decrease
- HCL Tech: Close to 1% loss
- TCS & Persistent Systems: Marginal losses
The market’s cautious tone reflects sensitivity to US monetary policy, AI-driven tech market trends, and near-term profit-taking.
Summary
Today’s session underscored the volatility in IT stocks, particularly for companies heavily tied to the US market and emerging tech trends like AI. Nifty IT’s decline for the third time in four sessions highlights a temporary correction following a recent rally. Investors continue to track macroeconomic developments and sector-specific news closely, while individual IT companies adjust to evolving global and domestic market conditions.
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