Indian IT stocks are in focus as the US economy shows signs of weakness, yet some companies continue to defy the odds. Despite a significant slowdown in the US, Coforge has hit an all-time high, even though 55% of its revenue comes from the American market. Meanwhile, broader IT sector peers like TCS, Infosys, and HCL Tech still trade well below their previous highs.
Currently, HCL Tech is 15% away from its all-time high, Infosys is also down about 15%, and TCS remains 20% below its peak. This divergence raises a crucial question for investors: is this a buying opportunity for Indian IT stocks?
Most Indian IT companies derive a major portion of their revenue from the US. With the US GDP contracting by 0.5% recently, there are genuine concerns about demand and project spending cuts. Additionally, the US current account deficit surged to a historic high of $450.2 billion in Q1 2025, the biggest since 2006. This has been largely attributed to the tariffs implemented by the Trump administration.
US Federal Reserve Chair Jerome Powell recently admitted that the Fed would have already cut interest rates had it not been for the uncertainty created by these tariffs. Although President Trump has temporarily paused the tariffs for three months, this pause is set to expire on July 9. Markets are now closely watching what will happen next, as any reimposition of tariffs could further affect corporate earnings and global trade flows.
Interestingly, Powell also stated that the Fed now expects only two rate cuts in 2025, down from the previously estimated three cuts. Rate cuts are generally seen as positive for IT stocks, as they lower borrowing costs and encourage enterprise spending, which benefits tech services.
The upcoming Q1 results for Indian IT companies are also expected to give investors much-needed clarity. TCS will kick off earnings season on July 10, followed by HCL Tech on July 12 and Infosys on July 23. These results will be crucial to gauge the real impact of the US slowdown and tariffs on their operations.
One key data point to watch will be employee hiring numbers. In the previous quarter, many Indian IT firms reduced their hiring due to macroeconomic uncertainty. HCL Tech, however, was one of the few companies that continued to hire during this period, which could reflect a more optimistic outlook.
With Coforge leading the way despite US exposure, and Nasdaq also trading at an all-time high, there may be signs that the market is already pricing in the worst. Whether this turns out to be a long-term buying opportunity will depend on upcoming results, hiring trends, and further clarity on Fed policy and US tariff decisions.
Disclaimer:This blog is intended for informational and educational purposes only. It does not constitute investment advice or a recommendation to buy or sell any stocks. Readers are advised to conduct their own research or consult a financial advisor before making investment decisions.
