Nifty IT Plummets Amid President Donald Trump’s Tariff Announcement, Expert Raises Concern For Indian Tech Sector

Indian benchmark indices Nifty 50 and Sensex opened in the red on April 3 as US President Donald Trump announced higher-than-anticipated reciprocal tariffs. Meanwhile, Nifty IT inched towards a decline of over 3 per cent during the same period.

Nifty IT was down by 4.18 per cent or 1517.30 points at 34,766.20 on April 3, at 12:34 pm. During the same period, the Sensex declined by 225.81 points or 0.29 per cent at 76,391.63, and the Nifty saw a drop of 47.75 points or 0.20 per cent at 23,276.45.

Trump revealed global reciprocal tariffs in an event at the White House. The US President announced a 26 per cent tariff on India, claiming that it was “kinder” reciprocal tariffs. Trump also labelled India as a “tariff king” and “tariff abuser” despite the country being a key trading partner of India.

Persistent Systems' share price was leading the decline in Nifty IT, declining by 8.65 per cent, followed by Coforge stock price in red, down 6.91 per cent, while Mphasis share price declined by 3.99 per cent.

Meanwhile, Tata Consultancy Services (TCS) stock price plummeted 3.32 per cent, while Infosys and HCL Technologies stock prices also dropped over 3 per cent each.

Additionally, Tech Mahindra shares, LTIMindtree stock price and Wipro shares were also trading in the red, down over 2 per cent respectively.

Trump implied a 10 per cent baseline tariff on all imports that will be made to the US and increased reciprocal tariffs at 26 per cent on India, while India has a 52 per cent tariff on US imports.

Sumit Pokharna - Vice President - Kotak Securities, while speaking with Outlook Money, expressed a grim outlook for the IT sector if the tariffs are not reversed in future.

He says, “If we focus on the IT sector, there is no direct tariff imposed. However, Indian IT companies will still face an indirect impact. A similar reaction has been observed in US markets, particularly on the Nasdaq, which serves as a proxy for the IT sector. The index has seen a significant correction due to the tariff announcement.”

The tariff matters because Indian IT companies derive most of their revenue from the US and other developed markets. Additionally, a blanket tariff of 26 per cent could potentially delay the Reserve Bank of India’s decision on a rate cut, increasing economic stress in a year of global slowdown.

Pokharna adds: “There are concerns that these reciprocal tariffs could lead to higher inflation, potentially delaying the repo rate cuts. Additionally, trade wars and geopolitical uncertainties may cause IT clients to delay or defer their spending decisions. As a result, discretionary IT demand, which was expected to pick up soon, will likely be postponed for several quarters until stability returns. This is not a good sign for Indian IT firms.”

Echoing Pokharna, Sunny Agrawal - DVP and Head of Fundamental Research at SBI Securities says: "In case, there is a recession in the US economy due to the ensuing tariff, the probability of cuts in IT spends by US corporates can't be ruled out. In addition, any impact on the EU can also lead to cuts in IT budgets by corporations based out of Europe. Moreover, AI can disrupt the IT service business models and can put pressure on pricing. Overall, growth estimates for IT cos for FY26 are likely to witness downward revision."

Speaking on the long-term impact of this tariff and when IT is expected to factor in the impact of tariffs imposed, Pokharna said that unless Trump reverses the decision, there is not much scope for optimism.

He says: “As for the long-term impact, it depends on how the situation evolves. If Trump reverses these decisions, conditions may improve. In the short term, the deteriorating macroeconomic environment will negatively impact Q4 earnings and FY26 guidance. We expect sequential revenue declines across major IT firms this quarter due to seasonal weakness, fewer billing days, and a slight drop in demand.”

India is currently interacting with the US for bilateral trade negotiations, which may offer some relief from tariffs in future but there is no clarity on it yet.