Nifty IT index drops over 2% to 7-month low as US recession fears hammer tech stocks; Infosys top loser

Indian stock market: The sell-off in domestic technology stocks deepened in today’s session, March 11, after major U.S. indices crashed overnight on Monday, driven by investor concerns over an economic slowdown after President Donald Trump did not rule out a recession amid the implementation of U.S. tariffs.

Fears of a slowdown in their biggest revenue component have sent Indian IT stocks tumbling in today’s trade, resulting in the Nifty IT index dropping another 2.2% to 36,826 points, a level not seen since July 2024.

All 10 constituents of the index traded in the red, with Infosys emerging as the top loser, down 3.2%, followed by Wipro, Tech Mahindra, L&T Technology Services, and Coforge, all trading with cuts between 1% and 2%.

In a Fox News interview on Sunday, Trump declined to predict whether the U.S. could face a recession, even as investors remained concerned that his fluctuating trade policies on Mexico, Canada, and China could dampen consumer demand and corporate investment.

These concerns deepened as a series of U.S. economic indicators already signaled growing weakness in the economy. The latest nonfarm payroll data showed an increase of 151,000 jobs in February, falling short of expectations. This marked the first monthly payroll report reflecting President Donald Trump’s policies. Meanwhile, the unemployment rate edged up to 4.1%.

The weaker-than-expected data, along with rising recession fears, pushed the tech-heavy Nasdaq into correction territory, now down 13% from its recent peak in just three weeks. Federal Reserve Chair Jerome Powell stated that the economy remained on a strong footing but emphasised the need for caution in lowering borrowing costs.

U.S. stock markets, which rallied after Trump’s victory in the U.S. presidential election, began to fade thereafter as concerns grew that his trade policies could backfire on the economy. 

From consumers to businesses, all are worried about the slowdown, which has already led consumers to scale back their purchases and increase their savings. Experts believe that if trade tensions escalate further, corporations may freeze fresh hiring and put expansion plans on hold, which could impact consumption, the main driver of the economy.

Investors are also losing confidence in the world’s largest economy, as evidenced by the sharp drop in the U.S. dollar index, which is generally considered a safe-haven instrument. The index has now declined by 6% from its recent peak. Reports indicate that trade tensions are making investors jittery and prompting them to shift to other safe-haven currencies.

Nifty IT crashes 20% in 3 months

Amid growing fears of a U.S. economic slowdown, investors have been exiting tech stocks in recent months, leading to a 20% decline in the Nifty IT index from its peak in just 3 months. Additionally, expectations of fewer U.S. Federal Reserve rate cuts in 2025 are also weighing on tech stocks.

Fears are mounting that tariffs, which are a tax, will drive up the prices of goods and limit the Federal Reserve’s ability to continue cutting interest rates. U.S. economic growth has already slowed in the fourth quarter of the last calendar year.

Meanwhile, the country’s central bank is closely monitoring White House trade policies to assess their potential impact on the economy.

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