New Delhi, Feb. 27 -- Rising trade tensions and economic uncertainties are adding new challenges for the IT services sector as tariffs and counter-tariffs have increased market instability, while inflation concerns and delays in interest rate cuts have worsened the outlook, according to a report by JM Financial.

"Tariffs and counter-tariffs have infused more uncertainty. Inflation and rate cut trajectories have worsened" said the report.

The report adds recent interactions with IT service providers have revealed mixed signals, with some reporting pauses in large programs by US banks. If this trend expands, it could have a significant impact on the sector's growth prospects.

"Our recent interactions with IT Services players gave us mixe...