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Informist, Friday, Aug. 1, 2025

MUMBAI – Information technology stocks are expected to remain in a range in the near term until clarity emerges on US tariffs. Late Thursday, US President Donald Trump signed an executive order imposing reciprocal tariffs ranging from 10% to 41% on its trading partners. The order listed higher import rates on 69 trading partners, including a 25% import tariff on India, that would start in seven days.

Negotiations between India and the US are likely to continue through August, with a team from the US expected in India later this month to thrash out a comprehensive trade agreement, BBC reported Thursday. Many expect the tariffs to be lowered and the higher reciprocal tariff rate of 25% to be temporary, till a detailed trade deal with the US is secured, the report said.

Though the sector is not expected to be directly impacted by US' reciprocal tariff, it might have an indirect impact on the country's IT services exports, as rising input costs may prompt US companies to reduce their discretionary spending on technology, analysts said. Going forward, weak demand environment amid tariff woes are expected to impact certain verticals of IT companies, such as manufacturing, automotive and healthcare, Rishubh Vasa, a research analyst at Indsec Securities, said. These segments had remained muted in the June quarter.

Nuvama Institutional Equities expect the demand environment to remain challenging for the next one to two quarters due to tariff-related macroeconomic uncertainty. However, it remains positive on medium-to-long term outlook for the sector as technology debt continues to be very high for enterprises, which demands a revival in spending as macro improves.

Vasa expects the September quarter to be subdued, with the macroeconomic worries continuing in the beginning of the quarter. However, he expects recovery from the December quarter if things stabilise in the September quarter.

The deterioration in macro-environment since the start of 2025-26 (Apr-Mar) is expected to lead to a modest year with potential recovery in the second half, Nuvama said. After soft June-quarter earnings for the sector, the brokerage expects growth for large-cap IT companies to be tepid in the near term due to macroeconomic headwinds but recover over medium term with a recovery in technology spends and the opportunities led by generative-artificial intelligence. On the other hand, tier-2 IT companies are seen maintaining their strong growth momentum.  

On a weekly basis, the Nifty IT index fell 2.7% this week, with most of its constituents, barring Coforge, Mphasis, and L&T Technology Services, falling over the week. Wipro was the biggest laggard, falling more than 6% over the week, followed by Tata Consultancy Services, Infosys, and HCL Technologies.

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Following are the resistance and support levels for the stocks for next week as per calculations by Informist based on their prices on the National Stock Exchange:

End

US$1 = INR 87.54

Reported by Arya S. Biju

Edited by Ashish Shirke

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