Mphasis, Infosys, TCS shares drop upto 7%; why are IT stocks falling today?

IT stocks falling today: The Nifty IT index fell 1.4 per cent intraday to hit a low of 36,770.15. Among individual stocks, Mphasis tumbled 6.7 per cent, Persistent Systems and HCL Tech 1.8 per cent

IT stocks down today: Information Technology (IT) stocks were edging lower in trade on Monday, June 2, 2025 after the US asserted that reciprocal tariffs "were not going away".  

The Nifty IT index fell 1.4 per cent intraday to hit a low of 36,770.15. Among individual stocks, Mphasis tumbled 6.7 per cent, Persistent Systems and HCL Tech 1.8 per cent each, Tech M 1.7 per cent, Infosys 1.5 per cent, and Wipro 1.4 per cent.

 

Why are IT stocks falling today?

The decline in IT stocks today came after US President Donald Trump’s Commerce Secretary Howard Lutnick said on Sunday that the "reciprocal tariffs were not going away"

 

Notwithstanding the legal battle surrounding Trump's authority to impose the sweeping tit-for-tat tariffs against the US' trading partners to "fix" the trade deficit, Lutnick said the tariffs will continue to stay in place despite the legal challenges. The administration, he said, will otherwise find new ways to implement them.

 

Separately, National Economic Council Director Kevin Hassett said on Sunday that he remains “very confident” that the judges on the nation’s top court would back Trump’s tariffs. 

 

Notably, the US Court of International Trade struck down much of the president's steep levies last week, which got reversed a day later by a federal appeals court.

 

US officials said they remain committed towards imposing reciprocal tariffs either in their original form, or figure out “alternative ways” to "restore the trade imbalance" of the US with other countries.

 

In fact, last Friday, US President Donald Trump announced to raise tariffs on steel imports from 25 per cent to 50 per cent, effective June 4, highlighting that he is not backing down from imposing tariffs. 

Relation between US tariffs and IT stocks

 

The imposition of US tariffs is negative for the Indian IT industry. This is because analysts fear that Trump’s tariffs could be inflationary for the US economy, which may force the US Federal Reserve to keep interest rates higher for longer, leading to a slowdown in the economy. 

 

The US, on its part, is a big market for outsourcing for the Indian IT industry. Hence, any slowdown in the US economy has a direct negative impact on Indian IT companies’ earnings growth.

 

Remember, the 10-year US Treasury yield climbed 24 basis points (bps) to 4.4 per cent in May, raising concerns that bond markets are pricing in a ballooning US fiscal deficit alongside mounting macroeconomic and policy uncertainty.