Infosys to acquire Australian cybersecurity firm The Missing Link for AUD 98 mn

Historically, the sector's average weighting in the Nifty 50 has been around 13.8 per cent since 2001.

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This is also the worst start to a year for IT stocks in over two decades. The Nifty IT index has dropped 23 per cent since the beginning of 2025, marking its worst year-to-date performance since the index's inception in March 2004. The previous low was in 2022, when the index declined 18.3 per cent in the first four months of the year.

At its current pace, the IT index is on track to lag the benchmark for a fourth straight calendar year—one of its longest and steepest periods of underperformance. Analysts link the sharp selloff in IT stocks to disappointing 2024-24 (FY25) fourth quarter (Q4) results and a weak earnings outlook for 2025-26 (FY26).

"Earlier, IT companies were growing revenues at 2-4 per cent annually in US dollar terms. Now, revenues are expected to stagnate or even contract in FY26. Investors' concerns about the sector's inability to deliver earnings growth were reinforced when both TCS and Infosys reported year-on-year declines in earnings for Q4FY25 and near-flat revenue growth," says Chokkalingam G, founder and head of research at Equinomics Research.

The industry's growth prospects have also been clouded by Donald Trump's tariff threats and their likely adverse impact on the US economy, the IT sector's biggest market.