IT shares crash amid market rally today, here's why

IT shares faced selling pressure amid a recovery rally in the broader market today after conservative commentator and prominent influencer Jack Posobiec posted on X that "all outsourcing should be tariffed" and that foreign countries must "pay for the privilege of providing services remotely to the US the same way as goods."

He added that the approach could be applied "across industries, levelled as necessary per country."

Later, senior counsellor for Trade and Manufacturing in the US, Peter Navarro reposted on X indicating support for Posobiec's stand. 

This turned sentiment negative in the IT sector today, for which the US is the largest market accounting for nearly 70% of India's IT export revenue. 

The buzz of tariff caused a 364 pts crash in the BSE IT index intra day to 34,615 on Wednesday.  Later, the index closed 199 pts lower at 34,780. 

On similar lines, Nifty IT index closed 263 points lower at 35,474. The index tanked 445 points intra day to 35,293. 

Meanwhile, Sensex gained 410 pts to 80,567 and Nifty closed 135 pts higher at 24,715 in the current trading session. 

The impact of tariff if levied on the IT sector  would likely hit the revenue of  Indian IT firms, which reported a subdued performance in the earnings of June 2025 quarter. 

The Indian IT and services sector plays a crucial role in the country's economy, providing a significant pipeline of engineering and computer science talent each year. Companies like Infosys, TCS, Wipro, Cognizant, and HCL lead in sponsoring H-1B visas, crucial for employing skilled workers in the US. Indian IT professionals are pivotal to US digital transformation efforts through software development and business process outsourcing.

However, potential service tariffs threaten this sector, affecting employment and India's economic standing. Such tariffs could also strain US-India bilateral relations, complicate talent mobility, and push Indian companies to diversify markets beyond the US.

Any changes in policy could have profound implications for the industry and its international collaborations, necessitating careful consideration by both governments to maintain the sector's growth and stability.