IT stocks under pressure: Nifty IT slips 7% on fears around recession

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Amid a massive sell-off across all sectoral indices, Nifty IT slumped 7.7 per cent in trade on Monday, April 7, 2025, logging an intraday low at 30,918.95. All 10 constituents on the index, around 9:50 AM, declined with  Coforge down 9 per cent, Mphasis, Persistent Systems and HCLTech down over 6 per cent, Tech Mahindra, Infosys, Wipro down over 5 per cent, TCS, Infosys and Oracle Financial Services down over 4 per cent. 

 

The Nifty IT index plunged amid recession-related fears due to US imposing 'reciprocal tariffs' on trading partners without showing signs of backing down. Also, China's retaliatory move of imposing 34 per cent tariff on US goods took a toll on Wall Street index Nasdaq which includes many technology companies with major ties to China. It closed down 5.8 per cent on Friday.   Also Read: Sensex, Nifty crash on 'Black Monday' - Why stock market is falling today?

 

"Large tariff shocks threaten the US and global recession. If these policies are sustained, it would likely push the US and global economy into recession this year. In very general terms, Canada and Mexico have got off lightly, while those in Asia, particularly China and Vietnam, have been hit hard," said  Vikram Kasat, head - advisory, PL Capital - Prabhudas Lilladher.  Federal Reserve Chair Jerome Powell said on Friday also cautioned that US President Donald Trump's new tariffs are "larger than expected," and the economic fallout including higher inflation and slower growth likely will be as well, as per Reuters.

 

Trump announced 'reciprocal tariffs' on April 2, 2025, along with unilateral tariff of 10 per cent. The baseline tariff came into effective from Saturday, April 5, 2025 and reciprocal tariffs are expected from April 9.  Also Read: Tariff turmoil catches crypto: Bitcoin dips below $80k amid global sell-off

 

As per expects the tariff imposed a irrational and will not continue for long. 

 

"There are a few things that investors should keep in mind. One, the irrational Trump tariffs will not continue for long. Two, India is relatively better placed since India’s exports to the US as percentage of gross domestic product (GDP) is only around 2 per cent and therefore the impact on India’s growth will not be significant. Three, India is negotiating a Bilateral Trade Agreement with the US and this is likely to be successful resulting in lower tariffs for India," said  Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.