The Indian IT sector is currently facing headwinds due to escalating global trade tensions, leading to a notable dip in the stock prices of major players like Mphasis, Infosys, and TCS. On June 2, 2025, these stocks experienced a fall of up to 7%, reflecting broader concerns about the impact of international trade conflicts on the industry.
The Nifty IT index also reflected this downturn, falling 1.4% intraday to a low of 36,770.15. Mphasis was particularly affected, tumbling 6.7%, while other prominent companies such as Persistent Systems and HCL Tech also saw declines of 1.8% each. Tech Mahindra, Infosys, and Wipro experienced drops of 1.7%, 1.5%, and 1.4% respectively, showing the widespread impact of the trade tensions.
These declines are attributed to the United States asserting that reciprocal tariffs "were not going away," exacerbating existing worries about trade wars. The sector's high dependence on revenue from the U.S. market makes it particularly vulnerable to such trade-related disruptions. The U.S. accounts for over 50% of the revenue for large-cap Indian IT companies, making any changes in U.S. trade policy a significant concern.
Back in April 2025, similar declines were observed when then U.S. President Donald Trump announced sweeping reciprocal tariffs against major trading partners. This announcement led to the Nifty IT index falling nearly 3%. During that period, Mphasis stock declined by 4.4%, while Tata Consultancy Services (TCS) and Infosys also experienced falls of over 3% each.
Nomura, a global brokerage firm, has also reduced its target price for several Indian IT companies, expecting slower revenue growth due to the uncertainty surrounding U.S. tariffs. The firm cut target prices for Tech Mahindra, Infosys, Wipro, HCL Technologies, and Tata Consultancy Services.
These trade tensions arise from geopolitical rivalries, economic protectionism, and disputes over intellectual property, often manifesting as tariffs, export controls, and diplomatic standoffs. The U.S.-China conflict is a prime example, with both nations imposing reciprocal measures that disrupt supply chains and corporate planning. Such tensions can lead to higher prices on imported goods, reduced product availability, and potential job impacts in export-dependent industries.
The global industrial policy is also scaling up, with governments competing with geopolitical rivals to secure strategic supply chains and cultivate critical sectors. As trade tensions increase, companies must make their supply chains more resilient to geopolitics.
Despite these challenges, some analysts remain optimistic about the long-term prospects of the Indian IT sector. Mohit Gulati, CIO and Managing Partner of ITI Growth Opportunities Fund, noted that Indian IT giants have consistently demonstrated resilience, navigating through various macroeconomic and geopolitical challenges over decades. He believes that long-term investors can rely on their proven ability to weather uncertainties and capitalize on global opportunities.
