News

Indian IT stocks witnessed selling pressure today, with the Nifty IT index falling 0.83 per cent to 39,161, while the BSE Focused IT index slipped around 0.7 per cent.

Heavyweights such as Infosys, TCS, Wipro, Tech Mahindra and several mid-cap IT stocks traded in the red.

This decline comes despite expectations of a slow but stable recovery for the IT sector in 2026. So, what is driving the weakness today?

The Indian IT sector is highly dependent on overseas markets, especially the US and Europe. Ongoing uncertainty around the US economy, interest rate trajectory and the timing of Federal Reserve rate cuts has kept global tech spending cautious.

Investors are still waiting for clear signs of a strong revival in discretionary IT demand, which is keeping near-term sentiment muted.

According to industry reports, FY26 revenue growth for IT companies is expected to remain in the mid-single digit range of 4–8 per cent. While this is an improvement over FY25, it is not strong enough to trigger aggressive buying. Markets believe that the recovery narrative is more medium-term, and hence it is not fully priced in yet.

In 2025, IT companies allocated significant budgets towards AI and digital transformation. However, 2026 will largely focus on AI deal conversions, and the real earnings impact from these deals is expected to be visible only after 12–18 months. As a result, investors are cautious, leading to profit-taking in IT stocks after recent rallies.

The BFSI segment is one of the largest demand drivers for Indian IT companies. Tech spending from BFSI clients remained under pressure in 2025, and a meaningful recovery in this segment is expected to be challenging even in 2026. This continues to cap growth expectations for large IT players.

Some stocks saw sharper cuts due to company-specific news. Coforge shares fell over 4 per cent after the company announced a board meeting to consider fundraising via QIP, preferential issue or other routes.