Infosys, TCS, Other IT Stocks Decline as Investors Await Fed Cues on Rate Cut Path

Indian stock markets witnessed weakness in information technology (IT) counters on Monday as investors adopted a cautious stance ahead of a crucial US Federal Reserve policy signal. Market participants are closely tracking Fed Chair Jerome Powell’s comments scheduled for Wednesday, which are expected to provide guidance on the pace of future rate cuts. The uncertainty surrounding the rate-cut trajectory weighed heavily on IT stocks, a sector that remains highly sensitive to global macroeconomic signals.

Infosys Leads Declines Despite Buyback Announcement

Among the frontline IT stocks, Infosys emerged as the biggest drag on the market. Shares of the Bengaluru-headquartered company slipped 1.32 percent to close at ₹1,505.40 on the National Stock Exchange (NSE). This decline came despite the company’s board recently approving a substantial share buyback worth ₹18,000 crore.

The buyback plan, announced last week, involves repurchasing 10 crore fully paid-up equity shares of a face value of ₹5 each. This transaction represents up to 2.41 percent of the company’s total paid-up equity share capital. The buyback price has been set at ₹1,800 per share, offering shareholders a premium over the prevailing market price.

However, the announcement failed to provide immediate support to the stock in the current trading session. Market participants appeared more focused on external cues from the US Federal Reserve than on company-specific developments. The cautious mood around interest rates overshadowed the positive sentiment that a buyback program usually generates among investors.

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Broader Weakness in IT Stocks

Infosys was not the only major IT company to come under selling pressure. Other industry leaders, including Tata Consultancy Services (TCS) and Tech Mahindra, also ended lower in Monday’s trade. Shares of these companies slipped by as much as 1.07 percent.

The decline in these stocks highlighted the sector-wide caution prevailing among investors. While company fundamentals remain important, the IT industry’s global exposure makes it particularly vulnerable to shifts in US monetary policy. The sector derives a large portion of its revenues from international clients, and interest rate trends in the world’s largest economy often influence corporate spending patterns on technology and outsourcing services.

Awaiting Federal Reserve Guidance

All eyes are now on US Federal Reserve Chair Jerome Powell, whose comments scheduled for Wednesday are expected to provide crucial guidance on the central bank’s approach to future interest rate cuts. Investors are keen to understand the pace and extent of monetary easing in the coming months.

The anticipation has created volatility across global markets, including in India. For IT companies, the outcome of Powell’s remarks could shape near-term sentiment, as changes in US interest rates have a direct bearing on business demand and investment flows. Market observers are particularly focused on whether the Fed will signal an aggressive rate-cut path or maintain a cautious stance amid economic uncertainties.

Impact on Investor Strategy

The weakness in IT counters suggests that investors are positioning themselves conservatively ahead of Powell’s comments. Instead of making aggressive bets, many traders are choosing to wait for clarity on the policy front.

Even significant corporate actions, such as Infosys’ large-scale buyback program, are being sidelined as broader macroeconomic signals take precedence. The selloff underscores the extent to which global monetary policy expectations influence market behavior in India’s IT sector.

Infosys Buyback Details and Market Reaction

The ₹18,000 crore buyback plan by Infosys was expected to lift investor sentiment. Under the proposal, the company will buy back 10 crore equity shares, representing 2.41 percent of its equity base. The buyback price of ₹1,800 per share was announced at a premium compared to its closing price of ₹1,505.40 on Monday.

Ordinarily, such a move is seen as a way to reward shareholders and enhance value creation by reducing the number of outstanding shares, thereby boosting earnings per share (EPS). However, the market’s muted response indicates that investors are currently more concerned about external risk factors than company-specific actions.

The gap between the buyback price and the market price also reflects uncertainty in investor sentiment. While some shareholders may find the offer attractive, broader market caution kept the stock under pressure in Monday’s trade.

TCS and Tech Mahindra Also See Losses

Tata Consultancy Services (TCS), the country’s largest IT services company, and Tech Mahindra also ended in negative territory. Both stocks witnessed declines of up to 1.07 percent. The pressure across these counters demonstrated that the cautious sentiment was not limited to Infosys but extended across the broader IT pack.

For TCS and Tech Mahindra, no major company-specific announcements were made in the latest session, suggesting that the declines were primarily driven by global factors. The anticipation of Fed signals acted as the overriding influence, leaving investors hesitant to hold or accumulate positions in IT stocks.

Market Outlook Ahead of Fed Chair’s Speech

As Wednesday approaches, market participants are bracing for potential volatility in IT stocks depending on the tone of Powell’s remarks. A dovish stance, suggesting a faster pace of rate cuts, could provide some relief and support to IT counters. Conversely, a cautious or hawkish outlook might exert further pressure on the sector.

For now, the prevailing trend indicates that IT investors are treading carefully. Until clarity emerges from the Federal Reserve, company-specific developments like buybacks are unlikely to significantly alter the cautious sentiment.

Conclusion

Monday’s trading session underscored the vulnerability of IT stocks to global monetary policy expectations. Infosys’ share price decline of 1.32 percent to ₹1,505.40, despite a sizeable ₹18,000 crore buyback announcement, highlighted the dominance of external factors in shaping investor sentiment. The buyback plan involves purchasing 10 crore equity shares at ₹1,800 per share, representing 2.41 percent of the company’s equity base.

Alongside Infosys, TCS and Tech Mahindra also saw declines of up to 1.07 percent, reaffirming the sector-wide caution. With investor focus firmly fixed on Powell’s upcoming comments, the IT pack is expected to remain sensitive to global cues.

Until the Federal Reserve provides clear guidance on its interest rate strategy, Indian IT stocks are likely to trade under pressure, reflecting the broader uncertainty in global financial markets.

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