Infosys, HCLTech, Coforge Shares Fall as US Rate-Hike Fears Hit IT Stocks

Indian IT stocks came under heavy selling pressure in early trade on Wednesday, with Infosys, HCL Technologies and Coforge among the major losers as renewed concerns over US interest rates weighed on the sector.

The Nifty IT index fell 3.06 per cent in early trade, making it the worst-performing major sectoral index as investors turned cautious about the outlook for technology spending in the United States.

Among the major IT companies, HCL Technologies declined 3.67 per cent, Infosys fell 3.50 per cent and Tech Mahindra dropped 3.43 per cent. TCS was down 2.88 per cent, while Wipro, Mphasis, Persistent Systems and LTIMindtree also traded lower.

Coforge emerged as one of the biggest losers, falling 5.70 per cent in early trade following a company-specific development involving its board evaluation process.

The broader weakness in IT stocks was largely driven by rising expectations that the US Federal Reserve could raise interest rates following stronger-than-expected employment data.

Higher interest rates could make American companies more cautious about discretionary spending, including investments in technology projects. This is particularly important for Indian IT companies because the United States remains one of their largest sources of revenue.

If US companies delay technology investments or become more selective about new projects, Indian IT firms could face pressure on deal wins, revenue growth and profit margins.

The concerns over interest rates therefore triggered selling across the IT sector rather than affecting only a few companies.

Coforge faced additional pressure after chairman Om Prakash Bhatt resigned following concerns raised by an internal audit regarding the company's board evaluation process.

The company-specific development intensified selling in Coforge at a time when the broader IT sector was already under pressure from global macroeconomic concerns.

The sector is also dealing with a difficult demand environment marked by weak discretionary technology spending, longer deal cycles and uncertainty over the impact of artificial intelligence on traditional IT services.

Investors have remained cautious as companies across major global markets continue to review technology budgets and prioritise spending more selectively.

The latest concerns about US interest rates have added another potential challenge, as higher borrowing costs could further delay technology spending decisions by clients.

The sell-off was visible across both large-cap and mid-cap technology stocks. Coforge declined 5.70 per cent, while Infosys, HCL Technologies and Tech Mahindra fell more than 3 per cent each in early trade.

The Nifty MidSmall IT and Telecom index also declined 1.97 per cent, indicating that the weakness was spread across the broader technology sector.

The fall in IT stocks also weighed on benchmark indices because major technology companies have a significant weight in the Sensex and Nifty.

During early trade, the Sensex fell more than 500 points, while the Nifty also traded lower as weakness in technology stocks added pressure to the broader market.

Apart from sector-specific concerns, investors are also monitoring rising crude oil prices and escalating geopolitical tensions in West Asia, which have contributed to overall market caution.

However, the immediate focus for Indian IT stocks remains the outlook for US interest rates and the potential impact on technology spending by American clients.

Any further change in expectations regarding the Federal Reserve's upcoming policy decision could keep IT stocks volatile.

Investors will also closely watch developments at Coforge following the sharp decline in its shares and the board-related concerns.

For the broader IT sector, the key question will be whether demand from global clients can improve despite cautious budgets, higher interest-rate expectations and continuing uncertainty surrounding technology spending.