Indian IT stocks are trading lower after Moody's Investors Service downgraded the United States credit rating last Friday, dealing a blow to investor sentiment. The rating agency cut the US credit rating by one notch to AA1, citing rising levels of government debt and a widening budget deficit. This downgrade now places the US below a triple-A rating by all three major agencies, reflecting deepening concerns about America's fiscal trajectory.
According to Moody's, the downgrade was triggered by an increasingly unsustainable debt path, which now totals $36 trillion. The situation has been further aggravated by political gridlock in Washington. A recent proposal by US President Donald Trump, termed “one big, beautiful bill,” aimed at significant tax cuts, was blocked by rightwing lawmakers. Economists fear that such measures, if passed, could inflate the US deficit even further.
This development has directly impacted Indian IT stocks, which are heavily reliant on the US for revenue. Over 60% of the revenue for major Indian IT companies comes from the United States. As a result, investor sentiment turned negative, leading to a broad sell-off across IT counters on Monday.
Here is how major Indian IT stocks performed:
TCS fell by 28.70 points or 0.81%, trading at 3532.60
Infosys dropped 21.80 points or 1.37%, closing at 1568.10
HCL Tech declined 8.50 points or 0.51%, at 1651.40
Wipro slipped 0.73 points or 0.29%, at 253.58
Coforge saw a significant fall of 96.50 points or 1.15%, at 8329.50
Tech Mahindra (TECHM) was down 11.60 points or 0.72%, at 1605.40
KPIT Technologies dropped 15.20 points or 1.11%, at 1349.60
Birlasoft (BSOFT) declined 0.65 points or 0.15%, at 429.05
Sonata Software (SONATSOFTW) fell 1.35 points or 0.34%, at 396.45
Mphasis lost 31.20 points or 1.20%, trading at 2569.20
Cyient dropped 12.40 points or 0.95%, at 1291.90
One notable exception was L&T Technology Services (LTTS), which gained 62.10 points or 1.39%, trading at 4536.30.
TCS and Infosys were among the top losers on the Nifty index, with declines of nearly 1.5%, highlighting the sector's sensitivity to US economic developments.
With the US market being the primary revenue generator for India's IT sector, any negative outlook on the US economy or fiscal stability can cast a long shadow over these companies. As concerns grow over the US government's ability to manage its debt and fiscal deficit, Indian IT firms may face increased headwinds in maintaining their growth trajectories in the coming quarters.
Disclaimer: The information provided in this article is for educational and informational purposes only. It should not be considered as investment advice or a recommendation to buy or sell any stocks. Stock market investments are subject to market risks. Readers are advised to consult with a qualified financial advisor before making any investment decisions.
