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IT stocks were trading lower in early trades on Tuesday, amid weakness in the markets. Consequently, the Nifty IT index was the top laggard among sectoral indices, falling more than 2 per cent in early trades to touch an intra-day low of 36,797.40.
However, the IT sector index had pared some of its losses and was trading lower by 1.24 per cent, at 9:52 AM.
According to market analysts, IT stocks were under pressure due to the weakness in the US economy amid fears of a slowdown due to the threat of tariffs and its impact on inflation and the economy of the country.
Talking about the drag on IT company stocks, independent market analyst Ambareesh Baliga, says, "One of the reasons is the expected slowdown in the US because of all this tariff issues. There has been a bit of a slowdown... If there is a overall slowdown, it can affect the order flows (for IT companies)".
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Baliga further added that US President Donald Trump's tariff threats also add an element of uncertainty for IT companies.
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"There could be something (tariffs) coming up as far as IT companies are concerned. As far as Trump is concerned, it's a complete uncertainty," he adds.
Apart from that, Wall Street also closed sharply lower overnight, after President Trump reiterated on Monday that the tariffs announced earlier on Canada, Mexico, and China, would go ahead as planned.
On Wall Street, the tech-heavy Nasdaq Composite index slid the most overnight, dragging 2.64 per cent to close at 18,350.19. It was weighed down by Nvidia’s decline of more than 8 per cent.
Baliga says that this also weighed on sentiment for IT companies.
Among the constituents of the Nifty IT index, at 10:08 AM, LTIMindtree was the top loser, dragging 2.96 per cent. Apart from that Persistent Systems (down 2.11 per cent), HCLTech (down 1.62 per cent), Infosys (down 1.48 per cent), Tech Mahindra (down 1.26 per cent) were the other notable laggards.
Shares of L&T Technology Services, Mphasis, Wipro, and Coforge were also trading lower.
In contrast, shares of TCS were trading higher by 0.5 per cent, at 3,510.55.
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