Infosys, TCS: Nifty IT slips 4% amid recession fears as US imposes tariff

Information technology (IT) stocks slumped in Thursday's trading session after US President Donald Trump imposed 'reciprocal tariffs' on all trading partners. Nifty IT fell 4.5 per cent and recorded the day's low at 34,642.4. The downturn in IT stocks can be attributed to fears around recession and as manufacturing hubs in China and Taiwan face new tariffs above 30 per cent.

 

White House hit China with a hike of 34 percentage points, taking the fresh levies on exports from the People’s Republic up 54 percentage points, according to Reuters. 

 

All 10 members on the Nifty IT index ended lower with Persistent Systems down 9.75 per cent, Coforge down 7.81 per cent, Mphasis, HCLTech, LTIMindtree, TCS, Infosys and Tech Mahindra down nearly 3 per cent. Overall, the stock slipped between 9.75 per cent to 1.96 per cent on the index.   ALSO READ | Explained: How will Donald Trump's reciprocal tariffs impact India?

 

 

"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.

 

On Thursday, Indian Standard Time (IST), Trump announced a 27 per cent 'discounted reciprocal tariff' on all goods imported from India. Overall, Trump announced universal tariffs of at least 10 per cent on practically all imports, with higher rates on countries that have the highest trade deficits with the US. He also said the US would impose a 25 per cent tariff on all foreign-made automobiles to address “horrendous imbalances” that have impacted the US industrial base. 

ALSO READ | Tariffs raise recession risks in US, put Fed in tight spot: VK Vijayakumar

 

Reports suggest the Indian government has set up a control room to monitor Trump’s announcements regarding the imposition of reciprocal tariffs. Senior officials from ministries including commerce and industry are closely tracking the developments.

 

Prior to the announcement of tariffs, India had been engaged in diplomatic efforts to seek an exemption. Last month, Commerce and Industry Minister Piyush Goyal travelled to Washington DC to initiate discussions on a bilateral trade agreement between India and the US. The visit aimed to address the impending tariff announcement and explore avenues for enhancing economic cooperation between the two nations.