IT Stocks Continue to Downfall Till Today’s Closing Session: All Eyes on TCS, Wipro, Infosys, Tech Mahindra, and Coforge

Stock Market Today, 4th April 2025: Leading IT stocks continued to decline in Friday’s market session. Their slump is extended for the second consecutive session. The Nifty IT index slumped by 3% in the early session due to selling pressure in heavyweight stocks, including Tata Consultancy Services (TCS), Infosys, Wipro, Tech Mahindra, and Coforge. 

The latest correction comes on the tip of a 4% slump on 3rd April 2025, breaking the Nifty IT index YTD loss to more than 20%. Rising global uncertainty followed by US President Donald Trump’s announcement of new reciprocal tariff is attributed by the experts. 

The tariff is expected to impact 60+ countries across the globe!

Impact of Fragile Sentiment on IT Stocks

The market response disproportionately hit major Indian IT firms that are highly dependent on U.S. clients for their revenues. Coforge, HCL Technologies, Infosys, Wipro, and TCS shares fell 2-7% on Friday, impacting the overall market indexes negatively. Significant falls were also registered by mid-cap players such as Mphasis and Persistent Systems.

“The announcement of reciprocal tariffs has shaken investor confidence. Given that a large part of Indian IT revenue comes from the U.S., any trade restrictions could have direct implications on profitability,” ~ Mumbai-based fund Manager

Global Cues Adding Pressure in India’s IT Sector

Several macroeconomic problems, including inflation, increasing interest rates, and decreasing discretionary IT spending, have placed pressure on the worldwide computer market. Investors are concerned that client budgets and transaction pipelines could decline due to the additional tariffs, which adds to uncertainty.

Also, economists anticipate that the international trade tensions and reduced company spending can negatively impact the Indian IT industry as it emerges from FY25.

Brokerage Outlook: Prefer Quality Instead of Volatility

International brokerage firm Bernstein is selectively positive in spite of the industry’s weakness. Bernstein made special mention of its most recent research note pointing out that it likes Coforge and Persistent Systems in the mid-cap segment and Infosys among large-caps.

Brokerage also mentioned Infosys as their top pick among the large caps because of its robust fundamentals, rebound ability, and margin sign. For mid-cap IT companies, Bernstein highlighted Coforge and Persistent Systems as the key players even after a 10% sharp decline. As per their report, both of the companies have robust order books and are expected to deliver mid-to-high teen revenue growth in the short run. 

On the other hand, Bernstein issued an Underperform rating for some companies with higher exposure to the automotive engineering and R&D sectors. These IT stocks include L&T Technology Services Ltd. and Tata Elxsi Ltd. 

Near-Term Outlook For IT Stocks in India

The near-term outlook for the Indian IT sector will likely remain clouded by uncertainties. Analysts anticipate higher volatility in IT spending and global geopolitical tensions. Undoubtedly, these uncertainties might mute earnings growth and impose margin pressure on business enterprises in the coming decades. 

IT budget is now the broader concern, specifically in North America and Europe, and may remain under stress for at least the next two quarters. Until any clarification on global trade pictures, one can only expect continued pressure on IT valuations. 

Despite the current bearish sentiment, long-term investors should be selective and focused towards the fundamentally strong stocks in the IT sector in India. Select the companies with diversified client bases and high digital transformation capabilities. 

Key Highlights

• TCS, Infosys, Wipro, Coforge, and Tech Mahindra plunged between 2% to 7%. 
• The Nifty IT index was down by 3% on Friday, and YTD loss rose 20%. 
• Donald Trump’s reciprocal tariff incurred global trade uncertainty. 
• The IT sector faces lower spending, reduced visibility, and macro headwinds. 
• Bernstein is bullish on Infosys, Coforge, and Persistent Systems.

The dynamic trends for Indian stock market enforced investors to closely watch upcoming earning reports and macroeconomic trends. It would help them reasses the trajectory of the Indian IT sector. Till then, be cautious on IT stocks in India and look for the trends to make informed investment decisions. 

Disclaimer: The news written is only for educational purposes. Univest does not suggest investing or trading in securities. Conduct your research before investing in the stocks to make an informed investment decision.  

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