India's IT Sector Sees Significant Decline, Priced Down Over 3% Amid Global Uncertainty and Weaker Earnings Projections

IT Stocks Drag Down Nifty IT Index Amid Weak Growth Outlook and Global Uncertainty

The Indian IT sector saw a sharp decline in early trade on Friday, with the Nifty IT index experiencing a drop of over 3 percent. This significant underperformance was observed despite the broader market also trading lower due to rising crude oil prices and geopolitical tensions.

At around 09:55 am, the Nifty IT index was down over 3 percent, with heavyweight IT stocks leading the decline. HCL Tech fell over 4 percent, emerging as the top loser on the Nifty 50 index. Infosys stock fell nearly 3.7 percent, while Tech Mahindra slipped about 2.8 percent, and TCS declined over 2.4 percent. Wipro also traded lower by more than 1.5 percent. The broad-based weakness in frontline IT names amplified pressure on the benchmark indices.

The selling pressure on IT stocks follows a mixed set of earnings and cautious commentary on the outlook. Infosys reported a strong sequential rise in net profit, but delivered modest revenue growth and guided for 1.5-3.5 percent constant currency growth for FY27, signaling continued demand uncertainty.

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Brokerages have flagged the weak growth outlook as a key concern, highlighting slower decision-making by clients, rising competition, and lower deal momentum. Some brokerages also pointed to pressures from AI-led deflationary trends and a sharp decline in total contract value, which could weigh on near-term growth visibility.

A few brokerages remained constructive on the medium-term outlook, citing stable margins and potential recovery driven by deal wins and AI partnerships. However, the immediate market reaction remained negative, with investors focusing on the subdued guidance.

The weakness was not limited to large-cap IT names. Midcap IT stocks such as Coforge and Mphasis also declined around 3-3.5 percent, indicating broader selling across the sector.

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IT stocks remain sensitive to global growth cues, given their dependence on overseas markets, particularly the US. With renewed geopolitical tensions, elevated crude prices, and mixed signals from global markets, risk appetite for IT stocks has weakened in the near term.