IT Stocks Tumble Today: US Rate Fears, Coforge Crisis Drag Nifty IT 3%

Indian IT stocks came under heavy selling pressure in early trade, with the Nifty IT index falling 3.06% and emerging as the worst-performing major sectoral index. The decline was driven primarily by renewed expectations of a US interest-rate hike in September, raising concerns over technology spending by American companies. Company-specific developments at Coforge also added to the pressure on the sector. The sell-off affected both large-cap and mid-cap IT companies, reflecting broader investor caution.

Among major stocks, HCL Technologies declined 3.67%, while Infosys fell 3.50% and Tech Mahindra dropped 3.43%. Tata Consultancy Services (TCS) was down 2.88%, while Coforge declined 5.70%, making it one of the biggest losers in the sector. LTI Mindtree fell 2.52%, Persistent Systems declined 2.42%, Mphasis dropped 2.32% and Wipro slipped 2.07%. The broad-based fall indicated that selling was not restricted to a few individual companies.

A major concern for investors is the changing outlook for US interest rates. Stronger-than-expected US jobs data has increased expectations that the Federal Reserve could raise rates in September. Higher borrowing costs can encourage companies to be more cautious about discretionary spending, including technology projects. Since the United States remains a key market for Indian IT companies, any slowdown in client spending could affect new contracts, revenue growth, deal wins and margins.

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Coforge faced additional pressure following the resignation of its chairman, Om Prakash Bhatt, after concerns were raised by an internal audit regarding the company's board evaluation process. The development came as the wider IT sector was already facing negative sentiment. Concerns surrounding Cognizant have also added to uncertainty, after the US suspended the company's permanent labour certification filings amid a wider investigation into alleged visa fraud. These developments have heightened investor sensitivity toward companies with significant exposure to the US market.

The latest decline comes against an already challenging environment for Indian technology companies. The sector has been dealing with cautious client spending, longer decision-making and deal cycles, and uncertainty over the impact of artificial intelligence on traditional IT services. Investors are therefore assessing whether renewed pressure on US interest rates could further delay technology investments. The Nifty MidSmall IT & Telecom index also fell 1.97%, showing that the weakness extended beyond large IT companies.

The IT sell-off also weighed on the broader Indian market because major technology companies have significant representation in benchmark indices. At 9:29 am, the Sensex was down 533.48 points, or 0.71%, at 75,044.10, while the Nifty declined 127.25 points, or 0.54%, to 23,507.85. Going ahead, investors are likely to closely track US interest-rate expectations, technology spending trends and company-specific developments. For IT stocks, the key concern remains whether cautious US clients and higher rates will further delay spending and weaken the sector's near-term growth outlook.