Indian IT Stocks Plunge as US Jobs Report Boosts Rate Hike Expectations

Indian IT stocks took a beating on September 7, with the Nifty IT index plummeting over 1% in early trade. The decline was led by Infosys, which fell 2.2% to Rs 1,105.10, followed closely by Tech Mahindra down 1.57% at Rs 1,571.80 and HCL Technologies declining 1.37% to Rs 1,275.70.

The weakness in IT stocks was attributed to the strong US jobs report released on Friday, which boosted expectations of a Federal Reserve rate hike. Markets are now pricing in a 58% probability of a Fed rate hike at its September 16 meeting and a 70% chance of a move in October, according to Reuters.

Higher interest rates and rising bond yields can weigh heavily on technology valuations globally, particularly for Indian IT companies whose largest market is the US. A tighter monetary environment can also raise concerns about discretionary technology spending by American clients.