A prolonged downturn continues to weigh on India’s technology sector, as weak earnings and global uncertainties deepen investor concerns about future growth.
Recent financial results from leading IT firms have added to the cautious sentiment. Infosys Ltd. projected annual revenue growth below expectations, while HCL Technologies Ltd. reported a profit miss earlier in the week. Both stocks declined sharply, with HCL also facing multiple analyst downgrades. As a result, the sector index fell over 5% on Friday, hitting its lowest level since June 2023.
The challenges highlight a dual pressure on India’s $315 billion IT industry. A weak global economic environment, partly influenced by the Iran war, has reduced discretionary technology spending. At the same time, the rapid rise of artificial intelligence is reshaping traditional business models.
The selloff has intensified since Tata Consultancy Services began the earnings season on April 9. In the last 4 months, nearly $115 billion has been erased from the sector’s market value. This decline has also impacted the broader market, as IT stocks make up about 10% of the NSE Nifty 50 Index.
“We continue to be cautious on the sector,” said Surendra Goyal, citing strong competition and the ongoing impact of AI.
Companies are now focusing on adapting to AI-driven changes. Infosys is integrating AI into its services to reduce costs and sustain client spending. Meanwhile, TCS has partnered with OpenAI to build AI data centres in India and is exploring similar deals with other firms.
Despite the downturn, some investors see value. The IT index is trading below 17 times its 1-year forward earnings, compared to 30 at the start of last year, while the Nifty 50 trades above 18 times.
Still, uncertainty remains high. The NSE Nifty IT Index has fallen nearly 25% in 2026, making it the worst-performing sector. Analysts note that companies lack visibility beyond a single quarter, as clients delay large projects due to economic uncertainty and unclear returns from AI investments.
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