Indian IT stocks fall on renewed US Fed rate-hike concerns after strong jobs data

Indian IT stocks dropped on Monday as stronger-than-expected US jobs data revived concerns over a September Federal Reserve rate hike. The Nifty IT index dropped over 2%, with Infosys, HCLTech, TCS and others declining. Analysts, however, see longer-term opportunities from AI-led spending on deployment, integration and modernisation.

Indian technology stocks witnessed selling pressure on September 7 as expectations of further interest rate hikes by the US Federal Reserve weighed on investor sentiment. The Nifty IT index declined more than 1% in early trading, underperforming the broader market.The sectoral index was down 1.93% at 30,104 around 10:36 am, while the Nifty 50 slipped 0.4% and the Sensex declined 300 points around the same time. Several major IT companies emerged among the biggest losers on benchmark indices.Infosys, TCS and other IT stocks declineInfosys recorded the sharpest fall among major IT firms, dropping 2.9% to ₹1,097. Tech Mahindra declined 1.9% to ₹1,565, while HCL Technologies, Wipro and TCS also traded lower.The weakness was not limited to large-cap companies. Midcap technology stocks including Mphasis, Persistent Systems and L&T Technology Services also witnessed selling pressure, declining between 1.4% and 1.9%.Sensex, Nifty Start In The Red As IPO Frenzy And Middle East Tensions Rattle Markets The decline followed a strong US employment report that increased expectations of tighter monetary policy. Markets are now assigning higher chances of a Federal Reserve rate hike in September and October, according to market estimates.Fed rate concerns riseA prolonged period of higher US interest rates and elevated bond yields can negatively impact technology valuations globally. Indian IT companies are particularly sensitive to changes in US monetary policy as America remains their largest market. Higher borrowing costs could also lead US companies to reduce discretionary spending on technology services, creating concerns over future demand for Indian IT exporters.Global markets reacted negatively to the employment data, with major US indices ending lower on Friday. The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite all declined.Investors are now awaiting the US inflation data due later this week for further indications about the Federal Reserve’s policy direction. A higher-than-expected inflation reading could strengthen the case for additional rate increases.