Shares of Indian IT companies fell sharply on Friday due to worries about a slowing U.S. economy and higher inflation. These concerns were made worse by former President Trump’s tariffs, which added to the negative sentiment. Additionally, new data showed that U.S. jobless claims rose more than expected, which increased fears about the economy being weaker than anticipated.

The Nifty IT index, which tracks the performance of IT stocks, dropped by more than 4%. Tech Mahindra was the hardest hit, falling nearly 6%. Other companies like Mphasis, Persistent Systems, Wipro, LTIMindtree, and Infosys saw their shares drop by 4-5%. TCS, HCL Tech, and Coforge also lost 3-4% of their value.

This sharp decline in IT stocks reflects the growing concern among investors about global economic conditions, especially in the U.S. Many believe that a slowdown in the world’s largest economy could hurt Indian IT companies, which rely heavily on U.S. clients for business. With inflation going up and more people filing for unemployment, the future of the sector looks unclear in the short term.

The U.S. Labor Department reported an unexpected increase in jobless claims, rising by 22,000 to 2,42,000 for the week ending February 22. This was the biggest rise since October. The increase was partly due to snowstorms and the Presidents’ Day holiday, but there could be more layoffs in the coming weeks.

Adding to the pressure, most Asian markets went down, with the MSCI Asia ex-Japan index falling 1.21%, following losses on Wall Street. Nvidia’s sharp drop in share prices after its earnings report caused a wider sell-off in tech stocks, especially those focused on artificial intelligence, which hurt the IT sector.

India’s benchmark indices, Sensex and Nifty50, witnesses massive decline during the trade on Friday, February 28, 2025. The Sensex (index with top 30 firms) tumble 1,452.82 points to 73,159.60 during Friday’s trade. Meanwhile, Nifty50 (index with top 50 firms) was down to 22,105.15 points.

“Stock markets don’t like uncertainty, and there’s been more uncertainty since Trump became president. His series of tariff announcements has been affecting markets. The latest news about a new 10% tariff on China shows that Trump is likely to use the early months of his presidency to threaten other countries with tariffs, then try to negotiate a deal that benefits the U.S.,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.