The Nifty IT index fell nearly 1.4 percent in early trading on May 22 as IT company shares fell in conjunction with Wall Street peers due to worries about a potential increase in the US federal deficit.
A new budget proposal that includes tax cuts is currently being finalized by Republican lawmakers in the United States. However, investors are concerned that the package, which is beset by significant disagreements over tax deductions, may increase the federal deficit of the nation. Sentiment was affected by worries in the US bond market, which followed Moody’s downgrade of US debt last week.
Wall Street has seen a massive selloff as a result of the uncertainties pushing rates on US long-term government bonds lower. The Nikkei 225 in Japan, the Kospi and Kosdaq in South Korea, and the Hang Seng index in Hong Kong all fell more than 1% in morning trading as the US market collapse spread to Asia.
IT was one of the worst-performing industries, and the benchmark indices, the Sensex and Nifty, also opened lower on Thursday. Since the US accounts for a large amount of revenue for domestic IT companies, worries about the US economy and fiscal situation may also affect the business prospects of IT majors.
Tech Mahindra fell more than 2 percent to trade at Rs 1,564.70 apiece, making it the biggest loser on the Nifty IT index. Shares of Persistence Systems, HCL Tech, and Mphasis then fell more than 2 percent each.
Wipro fell more than 1 percent, and industry titans TCS and Infosys fell more than 1.4 percent each. Shares of LTI Mindtree and Coforge were marginally losing money.
Recently, there has been a lot of volatility in the IT stocks. Following a sharp increase, the stocks experienced a sharp decline when Moody’s downgraded the US government’s credit rating from AAA to AA1. It downgraded because of the strain of refinancing existing debt at high interest rates and the soaring fiscal deficits.
Due to their high level of investor interest, the IT stocks will be closely monitored. “The IT sector is significant for India. Speaking at the Mirae Asset Capital Markets Invest India Conference 2025, market expert Manish Chokhani stated, “That’s what oil has been to Saudi Arabia.”
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