Last Updated:June 19, 2025, 14:24 IST
Indian IT stocks declined on Thursday after the US Federal Reserve kept its benchmark interest rate unchanged
Indian IT stocks declined on Thursday
IT Stocks Today: Indian IT stocks declined on Thursday after the US Federal Reserve kept its benchmark interest rate unchanged, holding the target range at 4.25%–4.5% for the sixth consecutive meeting. The Fed’s updated guidance signaled persistent inflationary pressures and a slower pace of monetary easing, dampening investor sentiment.
Despite maintaining its projection for two rate cuts in 2025, the central bank reduced its rate cut expectations for 2026 and 2027, according to the latest “dot plot.” Notably, seven of the 19 FOMC members now anticipate no rate cuts in 2025, compared to four in March, indicating growing divergence within the committee. Nonetheless, the policy statement was approved unanimously.
The Fed also downgraded its 2025 GDP growth forecast to 1.4% from 1.7%, and raised its inflation projections. Core PCE — the Fed’s preferred inflation gauge — is now expected to hit 3.1% in 2025, up from 2.8% earlier. The unemployment rate is also forecast to tick up to 4.5%.
Reacting to the Fed’s cautious tone, Indian IT stocks slipped. LTIMindtree dropped 3.5% to Rs 5,259.5, Tech Mahindra declined 3% to Rs 1,662.6, while Persistent Systems, Mphasis, Infosys, OFSS, and Coforge fell between 1% and 2.6%.
Cyient share price saw a significant fall of over 4 per cent to Rs 1,287 on June 18, meanwhile, shares of Birlasoft and Firstsource Solutions also declined between 2-3 per cent.
The Nifty IT index ended 1.4% lower, with Wipro the only gainer, up 0.7%.
At the post-meeting press conference, Fed Chair Jerome Powell said the economic outlook remains uncertain despite signs of moderation. “There is still time to assess incoming data before deciding on rate cuts,” he added.
The Fed described the economy as growing at a “solid pace,” with unemployment low but inflation still “somewhat elevated.”
Global brokerage Morgan Stanley has downgraded Tech Mahindra to ‘Underweight’ from ‘Equal-weight’, citing limited upside despite a slight upward revision in its target price to Rs 1,575 from Rs 1,550.
Simultaneously, the firm upgraded Wipro to ‘Equal-weight’ from ‘Underweight’, raising the target price to Rs 265 from Rs 216, as it sees relatively better positioning among large-cap IT names.
Among frontline IT stocks, Morgan Stanley continues to prefer TCS (Overweight), Infosys (Equal-weight), and Wipro, while it maintains Equal-weight ratings on HCL Technologies and LTIMindtree, and Underweight on Tech Mahindra.
In the mid-cap segment, the brokerage is Overweight on Coforge and Equal-weight on Mphasis, favouring these over engineering and R&D firms such as L&T Technology Services (Equal-weight), Cyient, and Tata Elxsi (both Underweight).
In a note titled “India Technology: IT Services”, Morgan Stanley highlighted that stock prices have rebounded since April lows, creating an opportunity to rebalance portfolios. It advised investors to use any further rallies as an exit point, due to the sector’s muted revenue outlook.
The firm expects two years of subdued revenue CAGR across the IT sector, with recent optimism falling short of earlier FY25 expectations. While valuation multiples are below their five-year averages, they aren’t compelling enough, given limited earnings momentum.
“Relative to benchmarks like the Sensex and Accenture, valuations aren’t stretched, but the absence of a strong re-rating catalyst keeps us cautious,” the note added.
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More
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