Indian IT stocks witnessed a sharp decline as weak economic data from the US triggered a fresh selloff in the sector. The Nifty IT index tumbled over 1% in intraday trading, reflecting investor concerns over potential economic slowdowns and their impact on technology firms with significant exposure to the US market.

The latest economic data from the US pointed to slowing growth and persistent inflationary pressures, raising fears of prolonged high-interest rates. This has led to increased market volatility, affecting sectors with heavy reliance on US clients, particularly Indian IT companies. Major players like Infosys, TCS, Wipro, and HCL Tech saw declines in their stock prices, dragging the broader index lower.

The Indian IT sector derives a substantial portion of its revenue from North America, making it sensitive to macroeconomic trends in the region. The weak US economic indicators have sparked worries about a slowdown in tech spending by enterprises, potentially impacting the revenue growth of these firms. Investors remain cautious amid concerns that higher interest rates and economic uncertainty could lead to delayed contracts and reduced IT budgets.

Despite the recent downturn, analysts suggest that long-term growth prospects for Indian IT firms remain intact, driven by digital transformation trends, cloud computing, and AI adoption. However, in the short term, the sector may face headwinds due to global economic uncertainties. Investors are advised to closely monitor further developments in US economic policies and corporate earnings guidance to assess the potential impact on Indian IT stocks in the coming months.