IT stocks experienced significant selling pressure on Friday, April 24, with the NIFTY IT index tumbling 1,252.2 points, or 4.15%, to hit a low of 28,872.10 against the previous close of 30,124.30 levels. According to reports from Upstox, out of ten constituents, nine were trading in the red, and one (OFSS) was in the green. The losers' list was led by Infosys (down 5%), followed by HCL Tech, Wipro, Coforge, and LTM. Over the past five sessions, the NIFTY IT index has slipped 9.5%, reflecting sustained pressure on the sector. Latest market updates show the NIFTY falling over 250 points to 23,900, with the Sensex slumping by 900 points to 76,700, as reported by CNBC-TV18. The broader market decline was driven by elevated crude oil prices, persisting uncertainties over a potential US-Iran peace deal, and foreign capital outflows that kept sentiment weak for the third consecutive session.
The March quarter earnings of major IT companies, including Infosys, TCS, Wipro, HCLTech, LTIMindtree, Tata Elxsi, and Persistent Systems, point to a sector navigating a difficult macro environment. As reported by Upstox, investor sentiment was already soured by weak showings by HCLTech, Wipro, TCS, Persistent Systems, and other firms in the IT space. Infosys delivered cautious guidance and 'nothing to cheer about' in Q4 earnings, while the top management spoke of a 'change in economic environment' amid the West Asia conflict, though things appear to be stabilising now. According to CNBC-TV18, Infosys shares have fallen by over 6%, dropping to their 52-week low, with analysts cutting estimates by 2-4% due to softer guidance.
Companies continued to highlight macro uncertainty in key markets like the US and Europe, which has led to delayed decision-making and slower deal conversions. According to Upstox, HCLTech CEO C Vijayakumar termed the year as one of an uncertain demand environment, stating that performance came below expectations due to softness in certain parts of the business, lower discretionary spending, and delayed decision-making. The sector faces a key drag from muted discretionary spending, especially in areas like consulting, digital transformation, and non-essential IT projects. As noted by CNBC-TV18, AI productivity savings are being passed back to clients, making the benefits less visible in company numbers despite healthy deal wins.
Despite challenges, most companies emphasised artificial intelligence (AI) as a major growth driver, with increased investments in AI capabilities, partnerships, and solutions. As reported by Upstox, companies have given conservative FY27 guidance indicating that a sharp recovery is unlikely in the near term. Wipro expects revenue from its IT services business to be in the range of $2,597-$2,651 million for the quarter ending June 30, 2026, translating to a sequential guidance of (-) 2.0% to 0% in constant currency terms. According to CNBC-TV18, while AI-driven projects are seeing some traction, the benefits are being passed on to customers, limiting margin accretion for IT companies.
The sector is in a transition phase with traditional demand drivers slowing and new growth engines like AI still scaling up. According to Upstox, NASSCOM Chairman Srikanth Velamakanni emphasised that restoring revenue growth and evangelising the rising role of artificial intelligence will be key priority areas. Velamakanni stated that with the rapid progress in technology, machines will surpass human work, but that does not mean a decrease in the importance of human roles. The industry body will focus on policy support to enable building more capacity and introducing an AI-led curriculum in the education system. Despite near-term challenges, analysts note that the disappointment in Infosys is only to the extent of softer guidance, with the company's strong free cashflow and dividend yield of 5.4% limiting downside risks.
