The Nifty IT index fell over 2% on November 28, becoming the worst performer on the Nifty 50. According to the US inflation data it only happened due to an increase in consumer spending for October. It also sparked concerns about the pace of future rate cuts, which may get slower than predicted, affecting sectors especially information technology, which has significant exposure to the US market. However, after the data revelation regarding consumer spending, US economy continued to grow, although efforts to minimize inflation appeared to have slowed.
Consumer spending in the US rose by 0.4% in October, exceeding expectations of gains around 0.3%, following a 0.6% increase in September. At 12:45pm the Nifty IT index made a downfall of 2.2% at 43,060, including other 10 constituent stocks, falling between 0.4% and 3.6%.
Indian IT stocks surged at a rate of 8% in November, following a 2% and a 4% decline in September and October.
Major IT Companies Faced Decline
L&T Technology Services observed biggest decline of 3.5%, followed by Infosys with 3%, besides TCS, HCLTech, Tech Mahindra which faced losses of over 2% each, while Persistent Systems, Wipro, and Mphasis dropped over 1%. Multiple IT companies brought up their revenue outlook, however their margin aura remained steady.
Growth was largely driven by the manufacturing and energy and utilities sectors, with initial signs of recovery in the BFSI vertical. The absence of mega deals in FY25 led to a year-on-year decline in total contract value (TCV) as per JM Financial analysts, encompassing top five IT firms in H1. However, for FY26, growth is expected to revive in short-cycle along with discretionary deals.
