The Nifty IT index tumbled nearly 3 percent on November 18 after US Federal Reserve Chair Jerome Powell said that there was no need to rush to lower interest rates due to ongoing economic growth, a solid job market and inflation that remains above its 2 percent target.

By 10:10 AM, the Nifty IT index was down 2.7 percent, with all 10 constituents declining 2–4 percent. The tech index has surged 16 percent year-to-date, outperforming the Nifty 50's 8 percent gain during the same period. Shares of major IT firms such as Tech Mahindra, TCS, Infosys, and Wipro declined by 2-4 percent, while midcap IT stocks including Coforge, Persistent Systems, L&T Technology Services, and Mphasis registered losses of 1-2 percent.

On November 14, in Dallas, Federal Reserve Chair Jerome Powell said that the central bank "didn't need to be in a hurry" to lower interest rates. The statement triggered a sharp sell-off in tech stocks, with the NASDAQ Composite falling over 2 percent—its largest single-day drop in two weeks.

Indian IT companies, heavily reliant on U.S. revenue, face challenges as higher U.S. interest rates make emerging markets like India less appealing to foreign investors.

The correction follows a two-week rally in IT stocks, driven by optimism over potential favourable policies from U.S. President-elect Donald Trump's administration.

In addition to concerns over rate cuts, foreign institutional investor (FII) selling and potential expenditure cuts by the U.S. government are adding to market jitters.

"FIIs with significant exposure to IT stocks appear to have been selling, contributing to the downward pressure," said Sumit Pokharna, Vice President of Research at Kotak Securities.

Additionally, Donald Trump recently announced the creation of the Department of Government Efficiency (DOGE), to be led by Elon Musk and Vivek Ramaswamy. As reported by CNN, the initiative aims to streamline federal operations and reduce government spending by at least $2 trillion.

"If implemented, it could negatively impact various sectors, including IT. While this remains speculative, the sentiment is currently negative," Pokharna said.

Vikasdhan - Grow your Dhan with Vikasdhan

Disclaimer- not an investment advice, only for educational purpose. To read complete disclaimer, click on the link  https://www.vikasdhan.com/disclaimer