Infosys, Mphasis, TCS, HCL Tech slide as US tariffs, weak dollar dampen IT stocks

Indian IT stocks came under selling pressure on March 7, snapping a two-day winning streak as global uncertainties weighed on investor sentiment. The Nifty IT index slipped amid concerns over US President Donald Trump’s proposed tariff measures and the weakening US dollar. Additionally, the Nasdaq index's slide into correction territory further dampened sentiment, triggering a sell-off in tech stocks.

US tariffs and dollar weakness spook IT investors

A major driver behind the sell-off in IT stocks was growing uncertainty surrounding Trump’s tariff policy. After weeks of threats, the US President announced that new tariff barriers on major trading partners, including India, will take effect from April 2. While automakers received some temporary relief with a one-month delay in tariffs on Mexican imports, no such concession was provided for India. Trump once again called India’s tariffs "unfair," adding to investor concerns about potential disruptions in exports.

Meanwhile, the US dollar index has been on a steady decline, marking its longest losing streak since September. On March 6, the index extended its downward trend, leading to a sharp appreciation in the Indian rupee. A stronger rupee negatively impacts IT exporters by reducing the value of their dollar-denominated earnings, further pressuring stock prices.

IT heavyweights under selling pressure

The market reaction was swift, with major IT stocks trading in the red. Mphasis emerged as the biggest loser, tumbling nearly 2 per cent to Rs 2,300. LTI Mindtree and sector heavyweight Infosys also faced over 1 per cent declines in early trading. L&T Technology Services, HCL Tech, Tech Mahindra, Tata Consultancy Services (TCS), and Wipro were all in negative territory, though with marginal losses.

Persistent Systems bucks the trend

Despite the broad sell-off, Persistent Systems defied the trend and traded in positive territory, bucking the bearish sentiment in the IT sector. Analysts attribute this divergence to company-specific factors and stronger-than-expected recent performance.

Market outlook: More pain ahead for IT stocks?

With continued uncertainties around US trade policies and a weakening dollar, IT stocks could face further volatility in the near term. Investors are expected to remain cautious, focusing on global cues and currency movements before making fresh allocations in the sector.