It is rather sharp cut across the markets after a rather listless week. The Nifty is down nearly 1%, trading below 25,200. The Sensex has also declined nearly 1%. Technology stocks see a sharp cut in today’s session. Wipro and TCS see maximum losses. The Nifty IT Index is down 2%.
According to market veteran Ajay Bagga, “For India, which has spent 9 months plus below the September 24, 2024 all-time highs, the issue is underwhelming earnings growth , global headwinds for its export sectors from IT, Pharma, Textiles and the premium valuations, which are not justified if a new normal of lower growth takes over. Trump Tariffs would have a marginal impact if these are higher than a base of 10% that is largely discounted by the markets.”
Three reasons why markets are falling today
Weak Q1 earnings expectation
The Q1FY26 earning season has gotten off to a slow start. The TCS Q1 and Tata Elxsi Q1 numbers failed to give much hope to investors. What makes the picture even more bleak is that most earnings preview estimates indicate a rather subdued Q1 performance by India Inc. A weak global outlook along with key headwinds ahead, including tariff-related worries, commodity price volatility, and China’s curbs on rare earth metal exports, has added to corporate India’s concerns.
Tech stocks under pressure
One of the key sectors that is seeing severe selling pressure is information and technology sector stocks. The TCS results, especially a hazy outlook about the FY26 growth and the decision on a pending wage hike pending, has spooked investor sentiment. Most key brokerages have indicated the possibility of near-term volatility. The demand scenario too does not offer much hope for investors.
Valuation concerns
Despite the sideways movement seen in the past few months, in terms of valuation, the Indian markets are at a significantly higher level. A recent study by Jefferies indicates that “the MSCI India valuations have risen to 23.3x, nearly 1.5x higher than the overall 10-year average valuation for India.” Even in comparison to the other EMs and average EM valuations, India’s valuation is significantly higher than its peers.