IT stocks tumble as analysts doubt a rebound in growth

Brokerages unsure of a speedy recovery after clients cut spending amid global uncertainty

- Jas Bardia & Varun Sood

Shares of India's largest information technology (IT) service providers tanked Wednesday after at least three brokerages raised concerns about the industry's growth recovery in FY26.

The country's top five software services companies, including Tata Consultancy Services Ltd, Infosys Ltd, HCL Technologies Ltd, Wipro Ltd, and Tech Mahindra Ltd, dropped as much as 1.99%, 4.28%, 1.91%, 3.44%, and 2.8%, respectively, on Wednesday's close.

This selloff erased ₹75,414 crore from the market cap of the top five companies in the sector alone.

These companies had a tough outing last year as macroeconomic uncertainties prompted their clients, including the world's largest companies, to pull back non-essential tech spending.

Analysts expected a revival in tech spending and subsequent growth for India's IT service providers, but they are now unsure of a speedy recovery.

While Morgan Stanley, Kotak Institutional Equities, and Motilal Oswal Financial Services flagged concerns surrounding demand revival for the country's IT sector on 11 and 12 March, JM Financial highlighted its worries late last month.

"We believe macro indicators and other lead indicators are pointing to a slower recovery in revenue growth in FY26 vs our prior expectations," said Morgan Stanley analysts Gaurav Rateria, Sulabh Govila, and Sakshi Rana in a note dated 11 March.