IT stocks decline on US debt worries: Tech Mahindra, Wipro, and TCS slip over 2%; all you need to know

Shares of IT services companies traded with notable losses on Thursday, May 22, following a dip in the US stocks as investors were worried about a possible widening of the US federal deficit.

The NIFTY IT index slipped over 1.7% to an intraday low of 36,900.15. Last seen, the index was down 1.74%.

A bill proposed by the US President Donald Trump administration that would extend tax cuts and increase military spending is amplifying debt and deficit concerns among bond investors. The uncertainty also led the 30-year US Treasury yields to their highest level since October 2023.

The US markets closed with sharp losses on Wednesday as investors turned cautious on rising treasury yields. Participants were concerned that the yield might swell if Congress passes President Donald Trump's proposed tax-cut bill.

Mphasis, Coforge and LTIMindtree shares were also down by 1.08%, 0.74% and 0.20%, respectively.

IT stocks, which had been volatile for the past few quarters given the global macro uncertainty, came under pressure after credit rating firm Moody's this week dropped the US government's credit score by one notch from the pristine Aaa to Aa1. It cited rising debt and interest costs “that are significantly higher than similarly rated sovereigns".

Meanwhile, Moody's said recently that “India is better positioned than many other emerging markets to deal with US tariffs and global trade disruptions, helped by robust internal growth drivers, a sizeable domestic economy and a low dependence on goods trade.”