Nifty IT Extends Losses For Fifth Straight Session Even As Benchmark Nifty Closes In Green

Investors breathed a sigh of relief on March 11 as the benchmark indices closed flat amid increased uncertainty and heightened volatility. The 30-share Sensex closed flat at 74,102.32. Levels down by 12.85 points or 0.02 per cent. The Nifty 50 index closed flat with a positive bias at 22,497.9 levels up by 37.6 points or 0.17 per cent.

Even as the benchmark indices closed flat, major sectoral indices continued to decline. The Nifty Bank, Nifty Auto and Nifty IT closed in the red on March 11. Notably, the Nifty IT index extended its losing streak for the fifth straight session as it closed at 37,400.1 levels down by 0.65 per cent. Between March 5 and March 11, the index declined by 1.76 per cent from 38072.3 level.

Major Domestic IT Stocks Drag Nifty IT Lower

On March 11, five out of the ten constituents of the Nifty IT index closed in the red and five closed in the green. Persistent Ltd shares gained the most on March 11 as they closed higher by 1.79 per cent on the NSE. Other major gainers included Coforge Ltd and HCL Technologies Ltd which closed higher by 1.28 per cent and 1.14 per cent respectively. Shares of L&T Technology Services Ltd and Mphasis also closed higher by up to 0.31 per cent on the NSE.

Bhavya Shah, Head of Research at Wallfort PMS & Advisory Services LLP told Outlook Money that consistent performance, inherent business strength can help some stocks in standing out amid selloffs. However if concerns aggravate, such stocks can also decline.

"Companies with consistent performance, inherent business strength coupled with their structure of cap table sometimes helps to stand out even in broad sell off. However if the concerns aggravate and trigger further broad sell off even such stand outs will also face decline," Shah said.

Despite five advances the declines made by Nifty IT heavyweights pulled it deeper into the red zone. Shares of Infosys which holds a 29.08 per cent weightage in the index, fell the most on March 11 as it closed lower by 2.02 per cent at Rs 1,667 apiece on the NSE. The stock was also among the major losers among Nifty 50 constituents. Earlier today the stock fell by nearly 4 per cent to hit an intraday low of Rs 1,637.05 apiece on the NSE.

Other index heavyweights such as Tata Consultancy Services Ltd, Tech Mahindra Ltd and Wipro also closed in the red on March 11 declining up to 0.78 per cent.

Why Is Nifty IT Declining

The Nifty IT index has been battered by trade headwinds amid continued uncertainty over US President Donald Trump’s policy decisions regarding trade tariffs. It is anticipated that the imposition of reciprocal trade tariffs can negatively impact Indo-US trade.

Earlier in February Trump said that reciprocal tariffs will be imposed from April 2 on the USA’s trading partners, including India.

"India charges us tariffs higher than 100 per cent, China's average tariff on our products is twice what we charge them, and South Korea's average tariff is four times higher. This is happening by friends and foes alike. The system is not fair to the US; it never was. On April 2, reciprocal tariffs will be enforced. Whatever they tax us, we will tax them," Trump said.

Additionally, the decline witnessed by tech stocks on Wall Street on March 10 was also mirrored by Indian IT stocks. US tech shares witnessed their biggest single-day decline since 2022. Notably, the Nasdaq 100 Index crashed 3.8 per cent on March 11. Shares of US-based tech giants such as Tesla Inc. also tumbled 15.43 per cent at the close while Nvidia Corp. closed 5.07 per cent lower.

According to a Bloomberg report the decline seen in US tech stocks followed remarks by the Trump administration officials and Trump himself suggested that the US economy is likely to slow down. Treasury Secretary Scott Bessent talked about “a detox period” as the US moves away from public spending. The US President also addressed questions regarding a possible recession and said that the country was going through a ‘period of transition’.

“I hate to predict things like that. There is a period of transition because what we’re doing is very big,” Trump said.

The looming threat of tariff imposition combined with Trump’s recession remarks seem to have reduced business and consumer confidence leaving investors more uncertain about the earnings growth of the domestic IT sector companies which provide IT-enabled services and are dependent on the US as a geography for a significant part of their revenue.

"Trump tariffs have played a role in the four session decline seen in the Nifty IT index as they have caused broad concerns on the economy and potential impact due to tariff tussle," Shah said.