Summary:
Indian benchmark indices traded flat as weakness in IT stocks offset gains across several domestic sectors. Technology stocks came under pressure after the US Federal Reserve indicated that interest rates could rise further in 2026 to tackle inflation.Infosys, TCS, HCL Technologies, Tech Mahindra and Wipro were among the biggest losers, dragging the Nifty IT index lower. Despite the decline in technology shares, gains in banking, auto, FMCG and realty stocks helped support the broader market.
Indian benchmark indices were trading nearly unchanged in the morning deals on Thursday, June 18, following losses in IT stocks amid strength in many local sectors. The negative sentiment for technology stocks came from a signal from the US Federal Reserve that interest rates could still go up in the current year due to concerns over persistent inflation.
At 9:16 am, the Sensex was lower by 63.62 points or 0.08% at 77,092.00, while the Nifty 50 index fell 14.60 points or 0.06% to 24,071.10. In spite of the falling trends among benchmark indices, the overall breadth was positive as there were gains of 740 stocks compared to 289 losses on the NSE.
IT Stocks Emerge as Top Losers
Selling pressure remained strong in the IT space, leading the sector to turn out to be the worst performer of the day on the NSE. The Nifty IT index lost 1.8%, becoming the sector’s largest loser.
As far as frontline stocks were concerned, Infosys saw its share price decline by 2.3%. HCL Technologies, meanwhile, registered a decline of 1.8%, while TCS’ share price dropped by 1.3%. Tech Mahindra’s share price fell by 1.3%, and that of Wipro by 0.9%. These stocks were the largest laggards among the Nifty 50 Index stocks.
Large cap IT stocks were not the only ones to show selling pressure. In the broader technology segment, Mphasis fell 1.7% on the BSE Midcap index, whereas Tata Elxsi shed nearly 0.9%.
Fed's Hawkish Message Impacts Technology Stocks
A fall in the price of Indian IT stocks came as a result of the fall in US technology stock prices overnight, following the decision by the US Federal Reserve to hold rates but hinting that more rate hikes are on the cards.
US central banks kept rates unchanged at 3.50-3.75%. But projections from the central banks show that nine policymakers see at least one interest rate increase before the year-end 2026. Federal Reserve Chairman Kevin Warsh restated the commitment of the central bank to fighting inflation.
The hawkish stance resulted in a sell-off in US stocks, with US technology stocks bearing the brunt of the fall in the equity market. The Nasdaq Composite index saw a drop of 1.34%, whereas the S&P 500 fell 1.21%.
Why Higher US Rates Hurt Indian IT Stocks
The reason for increased sensitivity of tech stocks to the interest-rate outlook is that rising interest rates diminish the value of anticipated profits. Also, rising costs of borrowing may affect the consumption of global enterprises, some of whom serve as customers for the IT industry in India.
Therefore, any signs of an aggressive monetary policy by the US Federal Reserve will put pressure on the perception of Indian technology exporters, whose income is connected with foreign technology spending.
Domestic Sectors Provide Support
Although IT stocks continued to face selling pressures, there were many other sectors that were trading in the green zone. Nifty FMCG was up 0.3% and Nifty Realty was up 0.3%. Other sectors such as Auto, Banking and PSU banking indexes have shown gains as well.
Weakness in IT stocks came at a time when Indian markets had registered gains for four consecutive days following a fall in crude oil prices, reduction in geopolitical tensions and increased inflows from foreign funds.
