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IT stocks under pressure, Nifty IT slips 2% ahead of Fed's policy decision

IT stocks under pressure, Nifty IT slips 2% ahead of Fed's policy decision

  • 19.03.2025 05:20
  • business-standard.com
  • Keywords: AI, Market Growth

IT stocks face pressure as Nifty IT slips 2% ahead of the Federal Reserve's policy decision. Investors await Jerome Powell's speech amid tariff uncertainties and soft economic data. US tech giants like Alphabet and Nvidia also declined, impacting sentiment.

Meta ReportsINFYsentiment_dissatisfied

Estimated market influence

Infosys

Infosys

Negativesentiment_dissatisfied
Analyst rating: Buy

Stock price decline due to market pressure.

TCS

Negativesentiment_dissatisfied
Analyst rating: N/A

Stock price decline due to market pressure.

Context

Analysis of IT Stocks Under Pressure: Business Insights and Market Implications

Key Facts and Data Points:

  • Nifty IT Index:

    • Declined by 2% ahead of the Federal Reserve's policy decision.
    • Among its 10 constituents, 9 stocks fell, with major declines in LTIMindtree, TCS, Infosys, Coforge, HCLTech (nearly 2%), and Persistent Systems, Tech Mahindra (over 1%).

  • Global Tech Megacaps:

    • Alphabet fell 3% after announcing a $32 billion acquisition of Wiz.
    • Nvidia dropped 2.3%, awaiting details of its latest AI chip.
    • Tesla slid 4.2% due to RBC trimming its price target, citing market share losses in China and Europe.
    • Amazon lost 1.8%, Meta declined 4.3%.

  • U.S. Market Performance:

    • Dow Jones: Down 0.62%.
    • S&P 500: Down 1.07%.
    • Nasdaq: Down 1.71%.

  • Economic Indicators:

    • U.S. CPI rose 0.2% in February (annual inflation rate: 2.8%).
    • Fed expected to maintain benchmark interest rates in the range of 4.25% to 4.5%.

Market Trends and Business Impact:

  • IT Sector Weakness: The decline in IT stocks reflects investor sentiment ahead of the Fed's policy decision, driven by concerns over U.S. tariffs and economic uncertainty.
  • Global Tech Sentiment: Selling pressure on U.S. tech megacaps (Alphabet, Nvidia, Tesla, Amazon, Meta) indicates broader market risk aversion.

Competitive Dynamics:

  • Strategic Moves:
    • Alphabet's $32 billion acquisition of Wiz underscores a strategic focus on cybersecurity.
    • Nvidia's AI chip developments highlight competition in the AI hardware sector.
  • Market Share Concerns: Tesla's decline reflects investor worries about losing ground in key markets like China and Europe.

Expert Opinions:

  • Citi's Cautious Stance: Indian IT stocks are overvalued at 24x forward, despite a 16% year-to-date correction. Revenue growth of 4% is expected for FY26, with margin improvement seen as uncertain.

Regulatory and Long-Term Implications:

  • U.S. Tariffs: Uncertainty around Trump's new tariffs could impact trade dynamics and tech exports.
  • Fed Policy: The Fed's rate decision and economic outlook will influence borrowing costs and investment sentiment globally.

Conclusion:

The pressure on IT stocks reflects a confluence of factors, including macroeconomic uncertainty, regulatory risks, and broader market sentiment. While the near-term outlook remains challenging, long-term implications will depend on Fed policy clarity and global trade dynamics.