Impact of Traffic on IT Sector: Nifty IT index fell over 23%

Mumbai | US President Donald Trump’s aggressive retaliatory traffic on more than 180 countries across the world have raised fears of a slowdown in the global economy. Although Donald Trump has not imposed a direct tariff on IT services, Indian companies are still likely to be affected by it.

Why will IT Companies be Impacted?

Due to the reduction in discretionary spending of companies, customers especially in the manufacturing, logistics and retail sectors are trying to adjust to the new tariffs. JP Morgan has warned that the probability of a US recession in 2025 has increased to 60%. Due to this, companies will cut their discretionary spending. Due to this, India’s Rs 24 lakh crore IT sector will face difficulties. More than half of India’s software exports of more than Rs 16 lakh crore are from the US. This is the reason why the Nifty IT index has declined by 23.29% till April 8 this year. Analysts say that this may slow down the deal cycle. Existing projects may be delayed and the revenue growth of IT companies may be affected.

What is the Opinion of Brokerage Firms?

Brokerage companies like Goldman Sachs and UBS have reduced the target price for shares of IT companies like Infosys, TCS and HCL Tech. In the next 12 months, large IT companies may fall by 19-24% and medium-scale IT companies may fall by 21-35%. Companies with 30-40% revenue from the US will be more affected by this. However, many analysts including Jefferies do not see the situation as serious. Many analysts also believe that due to tariffs, companies will invest more in AI to save costs and the IT sector will benefit. Indian IT companies will be able to invest more in the US market

How Much Income from it?

Mphasis and Persistent have US exposure of more than 80%. According to Geojit Financial’s data till December 2024, there are many IT companies in the country whose more than 50% of income comes from the US market.

America of Emphasis and Persistent

More than 80 per cent of earnings from

Company           earnings from America

Emphasis                         82%

Persistent Systems         81%

LTI Mindtree                   75%

HCL Tech                          65%

Infosys                             58%