Indian IT Stocks Tumble as US Recession Fears Mount; Is the Worst Yet to Come?

Nifty IT index plunges 9% this week as Trump’s tariff blitz and looming US slowdown spark investor panic; TCS, Infosys, Coforge among major losers

April 4, 2025: Indian IT Stocks Bleed as US Recession Fears Deepen, Trump Tariffs Shake Investor Confidence

Indian tech stocks plunged sharply on Friday, April 4, as concerns over a looming US recession and aggressive tariff policies from President Donald Trump rattled investor sentiment. The Nifty IT index fell 3.3%, hitting a nine-month low of 33,663, with heavyweight stocks like TCS, Infosys, HCL Tech, and Coforge leading the decline — some slipping as much as 6%.

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This drop follows a 4.21% crash in the previous session, bringing the index’s weekly loss to 9% and wiping out nearly 27% of its value since its December 2024 peak.

Why are IT stocks falling?

The sell-off was triggered by Trump’s sudden announcement of reciprocal tariffs on 180 countries, including India. These measures have heightened fears of a global trade war, which analysts warn could hit US consumer spending and push the world’s largest economy toward recession.

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The tech-heavy S&P 500 index has already suffered its worst single-day decline since June 2020, shedding $2.4 trillion in market value, while the Nasdaq and Dow Jones also plunged. US inflation risks and a potential economic slowdown have put Indian tech companies — which rely heavily on the American market — under pressure.

Also Read: Gold Slips After Hitting Record High Amid Global Market Selloff Triggered by Trump Tariffs

Indian IT companies face global headwinds

Indian tech majors derive 60–80% of their revenue from the US, making them highly vulnerable to US market dynamics. Expectations of growth-friendly policies under Trump have instead been met with rising protectionism.

Investor confidence has been shaken further by expectations of delayed deal-making, slower client budgets, and weaker Q4 FY25 earnings. Brokerage firms like Morgan Stanley and UBS have downgraded Indian IT sector outlooks, advising investors not to buy the dip.

“This is not the time to chase Indian IT stocks. The macro headwinds are too strong,” Morgan Stanley warned.

US outlook worsens

JPMorgan has raised the probability of a US recession to 60%, citing Trump’s tariffs as equivalent to a 22 percentage point tax hike, representing 2.4% of US GDP. UBS echoed the sentiment, estimating that effective tariff rates could rise to 25% — the highest since World War II — and slash US GDP growth to under 1% for 2025.

UBS now sees a 30% chance of a full-blown recession if the tariffs remain or escalate further.

Goldman Sachs has also revised its recession probability for the US to 30%, up from 20%.

What should investors do?

With Q4 earnings for Indian IT firms expected to show flat or negative growth, analysts are advising caution. Most large-cap IT firms may report quarter-on-quarter growth of -0.9% to +0.4% in constant currency terms. Accenture’s recent commentary and CIO surveys point to continued softness in tech spending.

While Indian equity markets may benefit in the long term from global investors rebalancing away from the US, IT remains a high-risk sector amid current geopolitical and economic uncertainties.

Conclusion:
The road ahead for Indian IT stocks looks bumpy. With the US economic outlook dimming, tariff tensions escalating, and investor risk appetite falling, the sector may continue to face headwinds in the near term.

Tags:
Indian IT stocks, Nifty IT index, TCS, Infosys, Coforge, Trump tariffs, US recession, stock market crash, Dalal Street, US-India trade, global economy, Nasdaq correction, IT sector earnings, Morgan Stanley, UBS, JP Morgan