Why IT Stocks Dropped 6% today ?

L&T Technology Services, Persistent Systems, and other IT stocks fell by 6% due to concerns about a US economic slowdown. Market experts fear that the US is heading towards stagflation, which could negatively impact global growth and investor sentiment. The Nifty IT index saw significant losses, with L&T Technology Services and Persistent Systems leading the decline.

The US’s stuttering economy caused a sharp sell-off, hitting domestic IT firms relying on services exports. Recent data showed that US consumer sentiment hit a 15-month low in February, while inflation expectations soared. Declining US business activity added to investor worries.

The increased long-term inflation target also impacted export-oriented IT stocks. With reduced business and consumer confidence, investors are uncertain about the growth outlook for the Indian IT sector, which heavily depends on the US for revenue. Consequently, the Nifty IT index sank 2.5%, making it the top sectoral loser, with all ten index constituents trading in the red.