IT Shares Fall for Sixth Straight Session; OFSS, Infosys Among Top Losers

Indian IT stocks remained under pressure on September 25, extending their losing streak to a sixth consecutive session as developments in the US kept investors cautious about the demand outlook for the sector. 

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The Nifty IT index was down 0.6% at 28,055.55 around 10:30 am. With the latest decline, the sectoral index had lost more than 4% over six sessions. 

The weakness came as crude oil prices stayed above $100 a barrel, adding to inflation concerns and strengthening expectations that US interest rates could move higher again. 

For Indian technology companies, the direction of US interest rates is closely watched because of the sector’s significant exposure to the American market. 

Infosys, OFSS lead losses 

Selling was visible across several large and mid-sized technology stocks during the morning session. 

Infosys fell 2%, while Tata Consultancy Services was down 0.5%. The two IT heavyweights were also among the stocks weighing on the Nifty 50. 

Oracle Financial Services Software saw a steeper decline, falling 5% and emerging as the biggest laggard on the Nifty 200. 

The move in OFSS came after its parent company, Oracle, closed more than 3% lower in the US on Thursday. According to the report, Oracle had sent a force majeure notice to the developer of its data centre in New Mexico following delays linked to power availability. 

Not every IT stock traded lower. HCL Technologies, LTM and Persistent Systems were in positive territory during the session. 

US interest-rate expectations return to focus 

The renewed pressure on technology stocks came as expectations around US monetary policy shifted following comments from Federal Reserve policymakers. 

The US Federal Reserve had raised its benchmark interest rate by a quarter percentage point in the previous week. 

Two Fed policymakers subsequently indicated that additional rate increases may be required as inflation remains above the central bank’s comfort level. 

According to the CME FedWatch Tool data cited in the report, markets were pricing in nearly a 69% probability of another US interest-rate increase in October. 

Expectations for interest rates have shifted further following resilient US economic data and concerns surrounding energy supplies. 

Rising bond yields and stronger dollar add to the backdrop 

Movements in the US bond and currency markets have also accompanied the changing interest-rate outlook. 

A selloff in bonds pushed long-term US Treasury yields to their highest levels in more than two decades. 

At the same time, the dollar strengthened. 

The dollar index, which tracks the US currency against a basket of other currencies, had risen more than 1% during the week to reach a two-month high. This also marked its first two consecutive weeks of gains since June. 

The dollar’s rise was showing signs of easing later, with the index edging slightly lower to 101.2. 

Nifty IT extends six-session decline 

The September 25 decline added another session to what has become a sustained spell of weakness for technology shares. 

With Nifty IT down more than 4% over six consecutive sessions, the sector was once again the weakest performer among the major sectoral indices during morning trade. 

The immediate backdrop remains tied to developments outside India. Crude oil holding above $100 a barrel has renewed inflation concerns, while expectations of further US rate increases have put the outlook for economic growth and technology spending back under scrutiny. 

For Indian IT companies with substantial exposure to the US market, those developments have kept the sector sensitive to every shift in the interest-rate outlook.