Indian IT reels as US trade tensions resurface
Indian IT stocks lost ground on May 30, a day after a US federal appeals court temporarily reinstated former President Donald Trump’s sweeping tariffs on foreign imports. The decision overturned a lower court ruling that had blocked the tariffs, stating Trump had exceeded his authority.
Shares of major IT companies, including Tata Consultancy Services (TCS), Infosys, HCL Technologies, Tech Mahindra, and LTIMindtree fell by up to 2 percent during intraday trade, dragging the Nifty IT index down by nearly 1 percent.
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The appeals court, in its interim order, stated: “The request for an immediate administrative stay is granted. The judgments and the permanent injunctions entered by the Court of International Trade in these cases are temporarily stayed until further notice while this court considers the motions papers.”
Should the Trump administration lose the appeal, it is expected to take the case to the US Supreme Court.
This legal twist came just a day after markets had rallied on the US Court of International Trade’s ruling, which blocked most of Trump’s so-called “Liberation Day” tariffs. That ruling had raised hopes of reduced trade tensions and bolstered investor sentiment across global IT counters.
Now, with tariffs back on the table, investor nerves have returned.
Brokerage firm Bernstein earlier downgraded the Indian IT sector to “equal weight,” citing increased risks of a US recession stemming from renewed trade hostilities.
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“The major loss will likely emerge from curtailed US discretionary spending, which could lead to medium-term consequences for the global economy and Indian IT firms,” it noted.
Nomura echoed similar concerns, warning that Indian IT services are among the most exposed to these latest tariff developments, especially amid growing fears of a US economic slowdown.
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