Indian IT Stocks Continue Downtrend as Fed Meeting Anxiety Weighs on Market Sentiment
Indian IT stocks fell sharply for the third straight session on December 10, extending a broader decline ahead of the highly anticipated Federal Reserve’s FOMC meeting outcome. With Indian IT companies deriving a major share of their revenue from the United States, investors adopted a risk-off approach ahead of a policy decision that could reshape global liquidity conditions.
By 2:30 pm, the Nifty IT index had slipped nearly 1 percent to 37,808, dragged by heavyweights as well as mid-tier IT names. Persistent caution across global markets and expectations of a “hawkish cut” from the US central bank kept the pressure on sectoral sentiment.
Fed Expected to Deliver a ‘Hawkish Cut’, Keeping IT Investors on the Edge
The Federal Reserve is holding its two-day policy meeting from December 9 to December 10, with the final outcome expected late tonight. Analysts widely expect the FOMC to cut rates by 25 basis points, but the tone of the statement and commentary from Chair Jerome Powell will be crucial.
Market experts believe the Fed may adopt a hawkish stance, signalling that while rates are being lowered, future cuts will be more difficult to justify unless the economic landscape weakens significantly.
A hawkish message from the Fed typically strengthens the US dollar and elevates global risk aversion—factors that directly influence foreign inflows into Indian equities and the performance of export-oriented sectors such as IT.
“Sentiment weakened primarily due to rising caution ahead of the upcoming Fed meeting, with investors worried about the possibility of a tighter global monetary stance and its spillover impact on emerging markets,” said Ajit Mishra, SVP–Research, Religare Broking.
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Indian IT Sector Faces Pressure as Global Client Spending Slows
The IT industry in India has already been battling multiple headwinds over the past year. International clients, particularly large US enterprises, have reduced discretionary spending, resulting in slim deal pipelines and delayed outsourcing decisions.
“The Indian IT industry has suffered a blow lately after global customers reduced spending on non-essential activities. Deal pipelines have become very slim and foreign investors, being apprehensive about macro risks, are still selling,” said Siddharth Maurya, Founder & MD, Vibhavangal Anukulakara.
Maurya added that while automation and AI continue reshaping the sector, uncertainty is likely to persist until clients begin confirming fresh outsourcing commitments. However, he noted that current valuations have already priced in most of the negative developments.
“This may turn into a value investment opportunity for long-term contrarian investors willing to tolerate volatility over the next 12–18 months,” he said.
Top IT Losers Today as Selling Intensifies Across Mid- and Large-Cap Tech Stocks
The IT sector was among the top losers in today’s market, with both frontline and mid-tier stocks witnessing sustained selling pressure.
Key losers included:
Persistent Systems: fell over 4%, leading the index decline
Coforge: dropped nearly 3%
Mphasis, Infosys, TCS and Tech Mahindra: down nearly 1% each
LTIMindtree: traded marginally in the red
Interestingly, Wipro and HCLTech were the only two major names trading in positive territory, bucking the sector-wide downtrend.
The divergence within the pack underscores how stock-specific fundamentals and recent deal announcements continue to influence investor positioning even amid sector-wide uncertainty.
How Fed’s Policy Signal Could Shape IT Stock Performance Ahead
The IT sector’s sharp correction comes at a sensitive time when global economic signals remain mixed. While inflation in the US has gradually cooled, the Fed’s reluctance to commit to deeper rate cuts has kept markets on edge.
A hawkish cut could mean:
Slower global IT spending recovery
Cautious client budgets for FY25
Continued pressure on foreign inflows into Indian equities
Stronger dollar, impacting currency gains for exporters
On the other hand, clarity from the Fed—even if hawkish—may help markets price in the new policy path, reducing uncertainty.
For now, analysts expect IT stocks to remain volatile until the Fed’s stance becomes clear and clients begin finalising deals for the upcoming quarters.
Conclusion: IT Stocks Brace for Volatility as Fed Outcome Looms Large
With IT stocks extending losses for a third consecutive day, the sector remains firmly in the spotlight as investors await the Fed’s interest rate decision. The corrections reflect a combination of global caution, slowing enterprise spending, and macroeconomic risks.
Still, analysts see potential opportunities for long-term investors, especially as valuations approach more reasonable levels and dividend yields turn attractive. Much will depend on how the Fed signals its policy trajectory and how quickly global clients revive technology spending.
For now, all eyes are on the Federal Reserve’s announcement, which will likely determine the near-term direction for Indian IT stocks and broader market sentiment.
