Nifty IT Falls 1.5% As Infosys, TCS, Wipro Track Overnight Decline In U.S. Tech Shares

The Indian equity markets began trading on a downtrend on February 18, with technology stocks taking the lead. The cause was after U.S. tech stocks in the overnight turnover, with any fears of disruption through artificial intelligence taking a toll on the mood.

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The Nifty IT index fell by 1.5% in intraday transactions, reversing the gains of the earlier session, according to the NSE data. The index moved all the stocks down in the first half of the trade.

IT Stocks Lead Sectoral Decline

Infosys, Tata Consultancy Services, Wipro, and HCL Technologies' shares were some of the biggest laggards in initial dealings.

Individual counters Persistent Systems, LTIMindtree, Tech Mahindra and Coforge fell by more than 2% each in intraday trade. In the meantime, Mphasis, L&T Technology Services, as well as Infosys, Wipro, HCL Technologies and Tata Consultancy Services, lost more than 1% each, as per exchange data.

The Nifty IT index has gone down by 21% in the last year and by 17% in the last month, which portrays an unbroken weakness in the sector.

The broader market opened on a cautious note, with technology counters underperforming other sectors in early trade, according to NSE data. While benchmark indices were trading without sharp moves, the drag from IT stocks weighed on overall sentiment during the morning session.

Weak U.S. Tech Cues Weigh On Sentiment

The fall of the domestic IT stocks came after the U.S. technology shares lost in overnight deals. The technology industry has also been under pressure due to apprehension that the rapid development of artificial intelligence would have an impact on the demand for traditional IT services.

Broader Market Context

The stocks of Indian IT had made a recovery in the last session, but the revival was only momentary as the selling pressure re-emerged on February 18. The fresh reduction was in tandem with the drop in the US technology stocks at night, indicating the sensitivity of the industry to global indications. With the exposure of the Indian IT firms to the American market in terms of revenue, any movement in the Wall Street technology stocks tends to affect the domestic valuation.

In intraday trade, the Nifty IT index dropped by 1.5%, and all the constituents of the index were trading below the line. The downwards trend represents further strain on the industry that is already at a cost of 21% in the last year and 17% in the last month, according to the exchange data. 

The weakness on February 18 is the continuing apprehensions that are associated with the trends in technology across the globe and sector-dramatic events, as opposed to mass selling across the market.