Nifty IT Posts Fourth Consecutive Day Of Losses As Demand Uncertainty Puts Pressure On Tech Shares

The Nifty IT index was under pressure on Tuesday, extending its losing streak to four days even when the broader market was trading on an uptrend. Investors' sentiment on the sector stayed negative, due to fears over the slowdown in technology spend, monetary policies from the U.S., and the impact of artificial intelligence on the IT services business worldwide.

At around 12:01 pm, the Nifty IT index was down 0.58%, while the benchmark Nifty 50 advanced 0.67%. The decline followed a sharp fall of nearly 2.7% in the previous trading session, extending the sector’s recent underperformance.

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Tech Mahindra, HCLTech Lead Declines

Selling was visible across both large-cap and mid-cap technology companies. Among Nifty 50 constituents, Tech Mahindra fell nearly 3%, making it the biggest loser on the benchmark index, while HCLTech declined about 1.5%. Infosys also traded lower, slipping around 0.2%.

Weakness was more pronounced among several mid-cap IT stocks. Coforge dropped 3.5%, Tata Elxsi declined 5.6%, Tata Technologies fell more than 2%, while KPIT Technologies plunged about 16%, placing them among the biggest losers in the BSE Midcap index.

Earnings Season In Focus

The sector’s weakness comes ahead of the June-quarter earnings season, with investors closely watching management commentary on client spending and business demand.

According to Emkay Research, IT services companies are expected to report a subdued start to FY27 as discretionary technology spending remains weak and enterprise clients continue to delay project approvals amid macroeconomic and geopolitical uncertainties.

The brokerage said the rapid adoption of artificial intelligence is prompting businesses to reassess technology budgets, prioritise automation initiatives, and consolidate vendors, affecting near-term revenue growth for traditional IT service providers.

Although the depreciation of the rupee over the past six months is expected to support earnings and margins to some extent, Emkay believes it will not fully offset slower demand across key international markets.

Growth Outlook Remains Mixed

Emkay expects Tier-1 IT companies to continue facing growth challenges, though Infosys, supported by acquisitions, and Tech Mahindra could report relatively stronger sequential revenue growth among large-cap peers.

Within the mid-cap segment, the brokerage expects Hexaware Technologies, Persistent Systems, Mphasis, eClerx, Firstsource Solutions, and Coforge to deliver comparatively better revenue performance, with Coforge benefiting from acquisition-led expansion.

The brokerage also expects margin trends to remain mixed due to wage revisions, integration expenses, large deal execution, and seasonal business factors, while hiring activity across the sector is likely to stay muted.

Reflecting these headwinds, Emkay noted that the Nifty IT index has underperformed the broader market by nearly 16% over the past three months and about 22% over the last six months. It has reduced valuation multiples for Tier-1 IT companies by around 10% to reflect slower growth expectations while maintaining its existing ratings on the sector.