Infosys, TCS, HCL Tech, Wipro, TechM: IT stocks in focus as Nasdaq tumbles

IT stocks such as Infosys Ltd, Tata Consultancy Services Ltd (TCS), HCL Technologies Ltd (HCL), Wipro Ltd and Tech Mahindra Ltd (TechM) are in focus on Monday morning after US stocks tumbled on Friday, with Nasdaq Composite falling over 4 per cent. The fall in Nasdaq, a tech-heavy index, was led mainly by semiconductor stocks such as Advanced Micro Devices Inc, Intel,  Marvell Technology and Broadcom, as concerns intensified over rising US bond yields, which may trigger Fed rate hike later this year. Indian IT stocks trading in the US, however, saw positive momentum.  

India's second-largest software exporter Infosys ADR climbed 2.34 per cent in after-hour trading to $12.69, after falling 1.35 per cent in normal trading session. Wipro ADRs, in fact, advanced 1.45 per cent to $2.1 apiece and added another half-a-per cent in after hours. It would be seen how the domestic market reacts to global cues, amid unwindng of AI trade in Asia today and intensifying of West Asia crisis with Iran striking Israel.      

"If FPI s are to invest in India, the AI trade which has been the principal driver of FPI outflows away from India should change. There are early signs of this happening. The crash in Nasdaq by about 4 per cent on June 5th is an indication that the AI bubble may burst. If the AI trade cools down and reverse that can trigger reversal of FPI outflows. Therefore, watch out this trend,” said V K Vijayakumar, Chief Investment Strategist, Geojit Investments.

Asian markets tanked earlier today. The biggest concern this morning is the unwinding of the global AI-led rally, with South Korea's technology-heavy KOSPI plunging nearly 8 per cent, triggering a temporary trading halt and extending its correction from recent record highs. Japan's Nikkei also opened sharply lower, reflecting a broad risk-off mood across the region, said Hariprasad K, SEBI-registered Research Analyst and Founder, Livelong Wealth. 

India had been at a receiving end of the AI-led rally so far. 

Antique Stock Broking recently maintained 'Hold' ratings on largecap IT services companies, while preferring select midcap stocks such as Coforge and Mphasis in its latest strategy note.  It said commentary from US retailers remained cautious, as the benefits from tax refunds fade and macroeconomic uncertainties, including higher energy prices and geopolitical risks, persist. 

Meanwhile, the broader market will be impacted by escalation in the West Asia war, with reports suggesting Iranian strikes on Israel. 

"Overall, market sentiment remains cautious to negative in the near term. Escalating tensions between Iran and Israel, rising crude oil prices, continued FII selling, and weak global market performance are likely to keep volatility elevated. Any further deterioration in geopolitical conditions could intensify selling pressure, while signs of de-escalation may provide support for a gradual recovery in risk assets," Ponmudi R, CEO of Enrich Money, a SEBI-registered online trading and wealth-tech firm.