Infosys, HCL Tech, Persistent, among other IT stocks drag Nifty IT down 2%; here are key things to know

IT stocks like Infosys, HCL Tech, Persistent Systems, and TCS among other heavyweights dragged the sectoral benchmark index down nearly 2% on Tuesday, September 22, as investors focused on the continued capital outflow from high-growth sectors amid elevated US Treasury yields and AI concerns in the market.

NSE data showed that the sectoral Nifty IT index has lost 1.7% to drop to an intraday low of 28,332.15 points on Tuesday’s market, in comparison to 28,830.90 points at the previous stock market close.

As of 12:54 pm (IST), Nifty IT was down 1.2% at 28,484 points, as per the exchange data.

Stocks like LTM, HCL Tech, Persistent, and Tech Mahindra were leading the pack of losers during the trading session on September 22.

Investors remained cautious amid the capital rotation move out of high-growth sectors as oil prices remained volatile amid geopolitical uncertainty. The US benchmark Treasury yields were also hovering at an elevated level near 5% added to the subdued sentiment in the equity in emerging markets.

In situations of elevated uncertainty, global investors are likely to pull their funds out of emerging markets into safer bets like government treasuries. US 10-year Treasury yields surged to 4.972% at 3:12 am (ET).

Experts predict that although the demand environment remains muted in the second quarter, the order books momentum and the employee headcounts will remain largely stable.

IT stocks in focus today

What do CLSA experts say?

Experts from research firm CLSA said that the IT companies’ management commentary on demand for the Q2 FY27 period remains cautious at best due to weak macro fundamentals impacted by geopolitics, higher rates and inflation, and muted discretionary demand.

Looking ahead, the analysts predict that despite the subdued demand environment, the IT order books and employee headcounts will remain largely stable, negating extreme negative repercussions of AI rollouts on renewed deals and IT jobs.

“Due to weak macro fundamentals impacted by geopolitics, higher rates and inflation, discretionary demand remains muted, implying more EPS downside risk, particularly for Infosys and Wipro. TCS too maintained a cautious stance while HCL Tech’s demand commentary remained the most resilient,” said CLSA analysts.

The experts also said that the BFSI segment of the IT company’s business continues to see resilient demand despite recent trading and IB revenue warnings in the market.

OFSS clarification

IT company OFSS shares recovered from their losses on Tuesday’s market after the massive sell-off pressure on September 21.

On September 19, a Financial Times report, which cited people aware of the development, said that around $18 billion of loans tied to a data centre leased to Oracle in New Mexico slid into stressed territory.

The company’s subsidiary OFSS shares declined over 8% on Monday’s market due to high volumes.

In an exchange clarification, IT services firm Oracle Financial Services Software (OFSS) said that OFSS, a subsidiary of Oracle, is a separate entity and the company has no knowledge of developments concerning the parent company’s data centre.

“We wish to clarify that OFSS is a subsidiary of Oracle, and it is a separate entity altogether. We do not have any knowledge of developments with regard to Oracle’s data centre mentioned in the referenced article,” the company informed the exchanges.