Shares of Infosys, India's second-largest IT services company, dropped as much as 4.51% to an intraday low of ₹1,033 on the National Stock Exchange, marking its biggest single day fall since June 19. According to market reports, the stock was trading 4.32% lower at ₹1,035 as of 2:10 pm, significantly underperforming the NIFTY50 index which was down 0.4%. Trading activity saw a spike with 7.22 lakh shares changing hands on the BSE compared with an average of 4.54 lakh shares traded daily in the past two weeks. The broader market weakness was evident as the Sensex declined 622 points or 0.82% to 74,955.33 and the Nifty fell 0.67% to 23,477.85 as of 12:05 pm, with the Nifty Financial Services index down 0.86% and Nifty Bank declining 0.51%.
The stock decline mirrored a weak trend in other IT shares amid rising expectations that American corporations would cut down on discretionary spending. As reported by analysts, stronger than expected August payrolls data from the United States increased chances of a rate hike by the Federal Reserve at its FOMC meeting due later this month. US clients of Indian IT companies may cut technology budgets due to increased borrowing costs, potentially postponing discretionary spending, reducing consulting spending, or renegotiating contracts with IT companies. According to V K Vijayakumar, chief investment strategist at Geojit Investments, two strong headwinds are impacting the market now: Brent crude around $100 amidst escalating US-Iran tensions and the booming IPO market sucking liquidity out of the market. The listing gains from IPOs, which has increased to about 22% since June, are driving investors into the IPO market since Nifty return YTD is negative 9.5%.
Infosys reported a nearly 9% quarter-on-quarter drop in consolidated net profit at ₹7,769 crore for the quarter ended June 30, 2026 (Q1 FY27) compared to ₹8,501 crore in the last quarter of the previous fiscal year. On a year-on-year basis, the company's net profit rose 12.2% from ₹6,921 crore. The company's revenue in the April-June period gained 3.8% QoQ to ₹48,211 crore from ₹46,204 crore seen in the previous quarter. In constant currency terms, the IT firm delivered $5,082 million in revenues for the quarter, marking a yearly growth of 2.4% and sequential increase of 1%.
Earnings Before Interest and Tax (EBIT) came in at ₹10,163 crore, marking a sequential growth of 4.3% as against ₹46,402 crore reported in the previous quarter. The EBIT margin for the quarter improved to 21.08%, up from 20.99% seen in the March quarter of FY26. Infosys reported free cash flow (FCF) of $0.96 billion at the end of Q1 FY27. Additionally, the company's AI-led initiatives contributed 8.2% to the company's overall revenue during the quarter.
Global investment firm JPMorgan noted in a recent report that AI inflation is some time away for Infosys. The firm added that competitive intensity has risen in vendor consolidation deals and Infosys has delivered steady margins with gains from Project Maximus. Despite the current market volatility, the company continues to benefit from its AI initiatives and steady operational performance across key business segments. The broader market challenges include foreign investors turning sellers, rupee weakness, and a global risk-off mood contributing to the sustained decline in IT stocks.
