IT Stocks Plunge 6% as US Economic Slowdown Fears Grow:

The morning session on February 24 saw a sell-off as fears surrounding the US economy sparked concerns. Technologies supporting the economy within the country through services exports to the US suffered the most losses. As of February, the forecasted US consumer confidence experienced an astonishing decline reaching a 15 month low, coinciding with an increase in the inflation expectation due to tariffs introduced by President Trump. Additionally, business activities within the US also saw a consistent decline alongside the negative expectations, building the pressure on investors. The long term inflation goal also jumped to a staggering 3.5 percent from the previous 3.3 percent, or as I like to call it, breathtaking. As expected, IT services export stocks plummeted with reduced business and consumer confidence. Alongside the workforce, the investors also seem unconfident in the growth potential of the Indian IT sector that relies heavily on the US for revenue. By 10:45 am, the Nifty IT index fell by 2.5 percent, making it the biggest sectorial loser around the time. All index constituents were in the deep red zone with L&T Technology Services and Persistent Systems leading the pack with over 5.5 percent declines. Not to mention, people are already worried if the US is slowly drifting back into stagflation and how that is going to affect global growing, which is very much in the slow-moving phase.

The phenomenon of stagflation which is marked by a slowing growth and increasing prices in America can pose a real trouble for India’s export driven sectors like IT. This can also impact emerging markets in India as foreign investors might be more eager to invest in safer zones such as the dollar and US treasuries.

As of now in February, Foreign Institutional Investors (FIIs) have sold Indian equities of about Rs 36,977 crore, wheras domestic institutional investors bought shares of worth Rs 42,601 crore.