FII Sell-Offs Choke IT Stocks in March Amid Trade Fears

After Tata Consultancy Services Ltd kicked off the earnings season with its slowest full-year revenue growth in four years, the question now is if the rest of the pack will follow the same script.

- Dipti Sharma

India's IT services companies were beginning to see improving demand for tech services in the US, their biggest market. But if the trade war unleashed by US President Donald Trump pushes his country into a recession, IT clients could tighten their discretionary spending budgets again, according to experts.

The jitters are reflecting in the markets. Foreign investors offloaded $973 million worth of Indian IT stocks in March, the biggest sell-off the sector has seen since April 2024. The Nifty IT index has dropped 24% year-to-date, sharper than the Nifty 50's 4% fall.

Further, IT services stocks as a share of the overall Indian assets under custody held by foreign institutional investors, dipped from 9.9% in February to 9% in March due to the ongoing geopolitical uncertainties, JM Financial Institutional Securities said in a report dated 10 April. IT services, however, remain the second-largest sector held by FIIs in India.