Indian IT Stocks Take a Hit Ahead of Federal Reserve Meeting

Indian IT Companies See Share Prices Drop

On December 10, the shares of Indian IT companies fell in trade, marking the third consecutive day of losses. This drop comes as investors are being cautious ahead of the Federal Reserve's FOMC meeting outcome, which is expected to impact the IT sector.

Nifty IT Index Sees a Decline

The Nifty IT index dropped by around 1 percent to 37,808, as seen at 2:30 pm. This decline is largely due to the uncertainty surrounding the Federal Reserve's decision on interest rates.

Federal Reserve Meeting and Its Impact

The US Federal Reserve is holding its FOMC meeting from December 9 to December 10. Analysts expect the Fed to make a hawkish cut, which means the language of the statement, median forecasts, and Chair Jerome Powell's press conference will point to a higher bar for further rate reduction. The outcome of the Fed's meeting will likely impact investor sentiment around IT stocks, as these Indian companies derive a significant portion of their revenue from the US market.

Expert Insights

Ajit Mishra, SVP, Research, Religare Broking, said, Sentiment weakened primarily due to rising caution ahead of the upcoming Fed meeting, with investors worried about the possibility of a tighter global monetary stance and its spillover impact on emerging markets.

Siddharth Maurya, Founder & Managing Director, Vibhavangal Anukulakara, noted that automation and AI are changing the IT sector, but the doubt will probably still be there until clients confirm new outsourcing deals. However, market prices have already factored in most of the negative scenario and dividend returns are quite appealing. In fact, this may turn into a value investment situation for long-term, contrarian investors who are willing to tolerate the volatility, over the next 12-18 months.

Top Losers in the IT Sector

• Persistent Systems shares fell more than 4 percent
• Coforge shares dropped nearly 3 percent
• Mphasis, Infosys, Tata Consultancy Services (TCS), and Tech Mahindra (TechM) shares fell nearly 1 percent
• LTIMindtree shares were trading in the red with marginal losses

However, Wipro and HCLTech shares bucked the trend to trade in the green. The IT index is among the top sectoral losers on the stock markets today, with Indian IT companies feeling the heat ahead of the Federal Reserve's decision.

Key IT stocks to watch include TCS, Infosys, Wipro, HCLTech, Tech Mahindra, and LTIMindtree. The outcome of the Federal Reserve's meeting will likely have a significant impact on the IT sector and the overall stock market.