Indian IT stocks are deep in the red once again. As the markets opened today, Indian IT stocks were among the worst performers. The Nifty IT index dropped over 3%, continuing a sharp downtrend. All 10 stocks on the index were trading in the red.
This is not just a one-day slump. Over the last seven trading sessions, the Nifty IT index has shed nearly 11% or 3,800 points. In a one-month window, it is down 14%, and in three months, it has crashed 25%. For a sector once seen as a defensive safe haven, that is a serious slide.
Let’s break down what is causing the fall and who the biggest laggards are.
Top tech stocks dragging markets down
Indian IT stocks are leading the market decline today, with all major players trading in the red. Among the biggest laggards, Wipro has slipped 4.5%, followed by MphasiS, Persistent Systems, and Tech Mahindra, each down over 3%. LTIMindtree, Infosys, Oracle Financial Services, and HCL Tech have also shed around 2%, while TCS has lost 1.5%. The Nifty IT index continues to slide under pressure from global uncertainties and weak earnings outlook.
4 reasons why IT stocks are falling
NASDAQ Futures point to weak global tech sentiment
Indian IT stocks often mirror global tech sentiment, especially that of the NASDAQ in the US – home to giants like Apple, Amazon, and Microsoft. As of this morning, NASDAQ futures slipped 2%.
Since a large portion of Indian IT revenue comes from the US, such a move triggers immediate panic among investors. A drop in NASDAQ usually hints at a global tech cooldown, which inevitably impacts Indian tech firms too.
Recession worries in the US
The US is the largest market for Indian IT services. With Trump’s new tariff policy in place, fears of slowing growth and rising inflation are once again making headlines. Analysts, including those at Bernstein, warn of “a significant inflationary impact” on the US economy, which may reduce demand for outsourced tech services.
Weak Q4 expectations
Back home, Indian IT companies are not offering much cheer either. Q4 earnings are expected to be muted.
According to Elara Securities, most firms are running out of ways to expand margins. With low attrition, high utilisation, and pricing pressure on new deals, IT companies are expected to remain in a tight spot. They forecast Infosys may guide for just 1-3% revenue growth in FY26, similar to FY25.
Valuation concerns and risk of further fall
Brokerage firms like Kotak Institutional Equities has also raised concerns that if a US recession becomes reality, there could be further downside of 18-35% in Indian IT stocks.
Even in a scenario without tariffs on services exports, the pressure on valuations remains high. According to the brokerage firm, TCS, Infosys, HCL Tech, and Coforge have the least downside risk, but they too are not immune.
According to the brokerage, “At an 18% downside in FV to CMP, TCS fares better than other stocks. Following TCS, Infosys, HCLT and Coforge also have relatively lower downside (19-21%) compared to CMP. The downside in FV compared to the base-case FV at 35-38% is higher for TechM, Coforge, LTIM and Infosys due to a mix of factors such as (1) higher exposure to discretionary spending, (2) higher exposure to retail and manufacturing verticals, (3) client-specific issues and (4) turnaround and lower management stability likely to pose additional challenges during a recession.
“The FV cut is steep for Coforge at 38% and LTIM at 36%, yet the downside is lower due to the already sharp correction in market price YTD,” the brokerage noted.