Nifty IT Index Extends Eight‑Day Decline as Fed Rate‑Hike Odds Rise

⚡ Key Financial Takeaways

The Nifty IT index recorded its eighth straight session of decline on Sep 9, slipping 1% and down 4% over the eight‑day stretch.

CME FedWatch shows a 70.3% probability of a Federal Reserve rate increase in October, up from 57.6% a week earlier.

Indian IT giants such as HCLTech, Infosys and Wipro posted losses of 1‑1.7% on Sep 29, while TCS is slated to report earnings on Oct 8.

Higher Brent crude prices, driven by Middle‑East diplomatic uncertainty, are adding inflation pressure that Fed Governor Lisa Cook says could linger.

US Treasury yields hit multi‑year highs, pushing the two‑year note close to a 5% yield and lifting the dollar index to 101.27.

💡 Why It Matters

The prolonged decline in the Nifty IT index reflects broader risk aversion among investors, driven by rising global inflation, higher Fed‑hike odds and geopolitical uncertainty. As IT services remain a major export earner for India, sustained weakness could affect foreign exchange earnings, corporate profitability and investor sentiment toward the broader market.

IT Index Extends Losing Streak The Nifty IT sector index slipped another 1% on Monday, September 9, extending a run of eight consecutive losing sessions. Over the same eight‑day period the broader sectoral index has fallen about 4%, underscoring a sustained negative bias among investors.

Drivers Behind the Weakness Analysts point to a combination of macro and company‑specific factors. Persistent concerns over discretionary spending, coupled with tepid guidance from IT management, have kept sentiment subdued. At the same time, geopolitical tension in the Middle East has lifted Brent crude for a second day after Iranian officials expressed doubt about a cease‑fire deal before the U.S. mid‑term elections, and former President Donald Trump rejected a proposal to reopen the Strait of Hormuz.

Higher oil prices feed into broader inflationary pressures, prompting market participants to reassess the Federal Reserve’s policy trajectory. The CME FedWatch Tool now assigns a 70.3% chance of a rate hike in October, a notable rise from 57.6% just a week earlier.

Fed Commentary Adds to Uncertainty Federal Reserve Governor Lisa Cook warned that inflation could stay elevated in the coming months, citing AI‑driven demand and rising oil costs. While she stopped short of calling for additional hikes, she highlighted that productivity gains from artificial intelligence may not be enough to offset near‑term price pressures. Cook also noted that data‑center expansion is straining energy and construction labor supplies, with electricity and water costs up roughly 5% over the past year.

Upcoming US Data and Indian Earnings U.S. economic releases slated for later this week—including consumer confidence, job openings, ADP employment, the personal consumption expenditures (PCE) index and the non‑farm payrolls—will be closely watched for clues on the Fed’s next move.

On the corporate side, Indian IT firms are gearing up for a busy earnings season. The first report will come from sector bellwether Tata Consultancy Services on October 8, followed by results from HCLTech, Infosys, Wipro and others. The market is likely to gauge whether earnings can offset the broader macro headwinds.

Currency and Bond Market Movements The U.S. dollar edged higher on Tuesday, hovering near a two‑month peak with the dollar index at 101.27, up about 1.8% for the month—the strongest performance since June. Meanwhile, a deepening sell‑off in U.S. Treasuries pushed the 10‑year yield to its highest level since 2007 and the 30‑year to a 2004 high. The two‑year yield, sensitive to Fed policy, rose close to 5%.

Outlook for Indian IT Stocks Given the confluence of higher oil prices, rising Fed‑hike expectations and a cautious domestic spending outlook, analysts anticipate that IT shares will likely continue to consolidate in the near term. The sector’s performance will hinge on earnings beats or misses and any fresh signals from U.S. data that could reshape expectations for monetary tightening.

--- *All figures are based on market data and statements released up to September 29, 2026.*

🏛️ Background & Context

India’s IT sector accounts for roughly 8% of the country’s GDP and is a key source of foreign exchange. The sector is sensitive to global economic conditions, especially U.S. monetary policy, because most of its revenue comes from overseas clients. Recent Fed‑rate hike expectations and higher oil prices have added cost pressures both globally and domestically, influencing discretionary spending and corporate IT budgets.

👁️ What To Watch Next

Investors should monitor: (1) the earnings releases of Tata Consultancy Services on Oct 8 and subsequent results from other major IT firms; (2) U.S. macro data later this week, especially the non‑farm payrolls and PCE index, for clues on the Fed’s policy path; (3) any developments in Middle‑East diplomacy that could further affect oil prices; and (4) movements in the two‑year Treasury yield as a barometer for short‑term rate expectations.