IT Services Stocks Plunge as U.S. Tariffs Hit Indian Exports

The U.S. tariff against Indian exports caused Indian IT services stocks to plummet due to fears about revenue growth prospects as well as valuation assessments.

The market drop of Indian IT services sector on April 3 came as President Donald Trump launched a 26% duty on all exports from India. Major IT services companies such as Infosys, TCS and HCL Technologies led the market decline with steep losses which reduced the Nifty IT index by almost 3% during early market hours.

At 9:30 AM the Nifty IT index had dropped 2.5% to 35,360.20 while Persistent Systems, Coforge and Mphasis together with other mid-cap IT service companies experienced daily declines of up to 6%. Indian IT services companies face falling U.S. client deals which stand as their key revenue driver leading to market sell-offs.

The United States imposed a global tariff policy on April 2 which specifically sent a 26% duty to India. India maintains its position as a vital trade partner to the United States but Trump declared the country to be a “tariff king.” The Indian technology sector expects slashed revenue prospects because its IT services companies heavily depend on outsourced activities in the United States.

The analysts at Morgan Stanley have identified both macroeconomic variations and technological developments as sources of valuation dangers for their clients. Nifty IT has experienced losses amounting to 6% within the past month and 15% in the six months period resulting in extensive loss of investor funds.

The current uncertainty poses extended pressure on IT services companies which have negative consequences for their earnings together with their long-term expansion potential.