IT Stocks Nosedive 3.5% After Fed Reserve Maintains Interest Rates; LTIMindtree, Tech Mahindra Among Top Losers

The Indian IT stocks nosedived in trade on Thursday after the U.S Federal Reserve maintained its benchmark interest rate unchanged, holding the target range at 4.25 per cent – 4.5 per cent for the sixth consecutive meeting.

The central banking system of the U.S has updated guidance signaled persistent inflationary pressures and a slower pace of monetary easing, dampening investor sentiment.

Despite maintaining its projection for two rate cuts in 2025, the central bank reduced its rate cut expectations for 2026 and 2027, according to the latest “dot plot.”

Notably, seven of the 19 FOMC members now anticipate no rate cuts in 2025, compared to four in March, indicating growing divergence within the committee. However, the policy statement was approved unanimously.

The Fed also downgraded its 2025 GDP growth forecast to 1.4 per cent from 1.7 per cent and raised its inflation projections. Core PCE — the Fed’s preferred inflation gauge — is now expected to hit 3.1 per cent in 2025, up from 2.8 per cent earlier. The unemployment rate is also forecast to tick up to 4.5 per cent.

Reacting to the Fed’s cautious tone, Indian IT stocks slipped. LTIMindtree dropped 3.5 per cent to Rs 5,259.5, Tech Mahindra declined 3 per cent to Rs 1,662.6, while Persistent Systems, Mphasis, Infosys, OFSS, and Coforge fell between 1 per cent and 2.6 per cent.

Cyient share price saw a significant fall of over 4 per cent to Rs 1,287 on June 18, meanwhile, shares of Birlasoft and Firstsource Solutions also declined between 2-3 per cent.

The Nifty IT index ended 1.4  per cent lower, with Wipro the only gainer, up 0.7 per cent.

At the post-meeting press conference, Fed Chair Jerome Powell said the economic outlook remains uncertain despite signs of moderation. “There is still time to assess incoming data before deciding on rate cuts,” he added.

The Fed described the economy as growing at a “solid pace,” with unemployment low but inflation still “somewhat elevated.”