Shares of major Indian Information Technology (IT) companies such as Tata Consultancy Services, Infosys and Tech Mahindra fell sharply during intraday trade on Wednesday.
The three were among the top losers on the Bombay Stock Exchange (BSE) along with Wipro and HCLTech.
At around 12:35 pm, shares of Tech Mahindra were down 2.93 per cent at Rs 1,290.40, while Infosys stock fell 2.29 per cent to Rs 1,646. TCS was down 1.68 per cent at Rs 4,079.25 and Wipro fell 1.48 per cent to Rs 504.55.
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Most other IT stocks were also trading in negative territory.
What’s behind the weakness in IT stocks?
The IT index was the top loser among heavyweight indices, falling sharply after the US reported higher-than-expected inflation in January.
The US Labor Department reported that the consumer price index increased 0.3 per cent for the month and on a 12-month basis, it stood at 3.1 per cent. It was largely expected that this would be around 2.9 per cent.
The inflation data sparked a sell-off on Wall Street, with key indices dropping over 1 per cent each. This led to a sharp decline in domestic markets, especially impacting IT stocks.
It may be noted that Indian IT companies are strongly dependent on overseas businesses, especially the US due to high order volume. While US order volumes of most Indian IT firms have slowed due to the ongoing global uncertainty, rising inflation in the world’s largest economy could add to their woes.
Meanwhile, banking and financial shares also faced significant declines during the trading session as investors turned cautious, tracking weak global cues.
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