IT stocks slide as misquoted tweet sparks confusion; what really happened

Nuvama, in a recent report, upgraded the IT sector to 'Overweight' from 'Underweight', noting that the space has largely become a trading and relative valuation call

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India's information technology (IT) stocks saw a sharp slide on Friday and traded volatily after unconfirmed reports of the US imposing tariffs on the sector triggered a panic among investors. 

 

The Nifty IT index opened 0.26 per cent higher and traded positively in early deals. However, the gauge saw a sharp fall from 10:00 AM after a popularly tracked stock market-related handle mistakenly posted on the social media platform 'X' that US President Donald Trump plans to impose tariffs on India's IT sector. 

 

Since that tweet, the index fell as much as 2.28 per cent, led by a decline in Persistent Systems, Mphasis and Tata Consultancy Services. As of 1:25 PM, the Nifty IT index was down 1.65 per cent, compared to a 0.23 per cent decline in the benchmark Nifty50. The Nifty IT index has fallen 20 per cent this year, the worst among key sectors. Nifty has risen by 4.3 per cent.   READ STOCK MARKET LATEST UPDATES LIVE 

RedboxGlobal India, the handle that reported the news, citing news agency Reuters, later issued a clarification. "Reports of Trump imposing tariffs on Indian IT firms were not from Reuters. It was an opinion/discussion aired by a local news channel. We apologise for the confusion," RedboxGlobal clarified in a tweet.  

 

Earlier in the day, President Trump said he would be imposing tariffs on semiconductor imports "very shortly", triggering a negative sentiment for tech stocks. "We’ll be putting a tariff very shortly. You probably are hearing we’ll be putting a fairly substantial tariff, or not that high, but a fairly substantial tariff," he said while addressing reporters during a dinner at the White House. 

 

The decline in the index came despite the rupee hitting a record low on Friday. A decline in the value of the currency is a positive for the IT sector as it improves the topline with overseas deal wins. 

Nuvama upgrades IT stocks

Nuvama Institutional Equities, in a recent report, upgraded the IT sector to 'Overweight' from 'Underweight', noting that the space has largely become a trading and relative valuation call over the past three years rather than a structural one.

 

The brokerage highlighted that the relative valuations are now one standard deviation cheaper, despite no earnings differential. A 4 per cent dividend yield provides downside protection, and a weaker currency could help offset the demand slowdown.

 

Nuvama acknowledged ongoing structural concerns but said that, given widespread disruptions across sectors, Information Technology at least offers value. The firm added it will reassess its stance if conditions change.