Infosys, HCL Tech, Wipro shares plunge; here’s why IT shares are falling

IT stocks fall: IT shares were facing heavy selling pressure on Wednesday, March 12, with the Nifty IT index plunging as much as 4.20% amid mounting concerns over the US economy entering recession.

Mid- and small-cap IT stocks also witnessed declines, with the Nifty Midsmall IT & Telecom index falling 3.7%, data from the National Stock Exchange showed.

With today’s losses, the Nifty IT index has now entered bear market territory, having plummeted 22% from its 52-week high of 46,088.90, recorded in December last year. Analysts note that a stock or index is classified as being in a bear market when it falls over 20% or more from its recent peak.

Why are IT stocks falling?

The sharp decline in IT stocks stems from escalating fears of a looming recession in the US, which has raised concerns about the growth prospects of Indian IT firms. The US is the largest market for Indian IT companies, as they earn a significant amount of revenue from there, making them vulnerable to any downturn in the US.

The sentiment for IT stocks further took a knock after global investment bank Morgan Stanley cited concerns over Infosys' growth outlook, the country's second-largest IT company.

“We see downside risks emerging for both the revenue growth of Indian IT services and valuation multiples,” wrote Morgan Stanley analyst Gaurav Rateria in an investor note. According to news reports, analysts note that the company’s growth may be compromised due to weaker deal wins in fiscal year 2025 compared to the previous year.

Heavy losses across IT space

The impact of these concerns was evident across the IT sector, with all ten constituents of the Nifty IT index trading in the red. Infosys saw the steepest decline, dropping nearly 6% to hit an intraday low of ₹1,563.80. Other major losers included Wipro (-5.31%), Tech Mahindra (-4.30%), HCL Technologies (-3.15%), L&T Technology Services (-5.35%), Mphasis (-4%), Coforge (-3.59%), and Persistent Systems (-3.31%).