CLSA, Morgan Stanley sound near-term caution on IT stocks

A double whammy for sector after Fed downgraded GDP growth to 1.4 per cent in 2025

- SAI ARAVINDH & PUNEET WADHWA

Global brokerages CLSA and Morgan Stanley have turned cautious on the Indian information technology (IT) sector and warned that its short-term outlook remained uncertain due to ongoing global economic concerns.

A double whammy for the IT sector on Thursday was the US Federal Reserve's downgrading of 2025 growth estimates for the US economy to 1.4 per cent from 1.7 per cent earlier amid higher inflation.

As a result, the Nifty IT index slipped 1.54 per cent on Thursday in intra-day deals, with Oracle Financial Services, Coforge and LTIMindtree among the top losers. Tech Mahindra fell as much as 2.9 per cent. Wipro, however, rallied 1.4 per cent as Morgan Stanley upgraded the stock from "underweight" to "equal-weight" and raised the price target to 265 from 216 earlier.

So far in calendar year 2025 (CY25), the Nifty IT index has been an underperformer, slipping nearly 11 per cent as compared to 5 per cent rise in the Nifty 50 index, ACE Equity data shows. Oracle Financial Services, TCS, Wipro and Infosys have been the top laggards, falling up to 25 per cent during this period.