US Stock Market Crash: Game Over For India’s IT Sector?

US Recession Fears Rise: IT sector stocks will be under pressure in future trading sessions as J.P. Morgan raised global and US recession probability to 60% following Trump's tariff move.  

The warning comes amid rising trade tensions between the United States and China, as the Trump administration recently imposed new tariffs on multiple countries. China responded with its own duties on U.S. goods, raising concerns about a long and damaging trade war.

JP Morgan says these aggressive U.S. policies are shaking business confidence, affecting supply chains, and putting pressure on global economic growth. Other major institutions share similar views.

IT Sector Under Pressure

A U.S. recession could have a major impact on the $283-billion IT sector, as inflation in the U.S. may lead clients to reduce spending on technology services, according to a Reuters report. The U.S. accounts for more than half of India's $190 billion software exports, making this sector more sensitive.

Also Read: US Market Crash: Wall Street Takes A $5 Trillion Hit As Trump’s Tariff Wars Escalate

Brokerages Downgraded IT Sector Stocks

Brokerages like Bernstein and ICICI Securities have downgraded their ratings on Indian IT stocks following the tariff news. At least six analysts now expect Indian IT firms to give a cautious outlook for annual revenue growth when they report earnings next week, as per Reuters report.

Companies with high exposure to discretionary IT spending—especially some large-cap and mid-cap firms—may see the most pressure. BNP Paribas analyst Kumar Rakesh told Reuters that the impact could become more visible by the September quarter.

Nifty IT index fell 3.6% on Friday and lost over 9% for the week—its worst performance in more than five years.

Brokerages Raise Concerns On US Economy

S&P Global has raised the risk of a U.S. recession to 35%, and Goldman Sachs has matched this estimate. HSBC said that equity markets are already pricing in a 40% chance of recession.

Brokerages like Barclays, UBS, Deutsche Bank, and BofA Global Research warn that if the tariffs remain in place, U.S. economic growth could drop to between 0.1% and 1%.

These concerns have pushed analysts to cut their stock market targets. UBS downgraded U.S. stocks from "attractive" to "neutral," and Capital Economics now sees the S&P 500 ending the year at just 5,500—the lowest forecast among major firms.

Wall Street had initially rallied when Trump won a second term, hoping for business-friendly policies. However, those hopes have faded quickly with the new tariffs in place.

To support the economy, many analysts now expect the U.S. Federal Reserve to cut interest rates more aggressively. Goldman Sachs predicts three rate cuts by year-end, and Citigroup expects even more—up to 125 basis points starting in May.

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