IT stocks face selling pressure; LTTS tumbles 5%, while TCS, Infy, Wipro and HCL fall up to 4%

Information technology (IT) shares came under heavy selling pressure on Monday, February 24. The measure of IT shares on the National Stock Exchange, NIFTYIT index, dropped as much as 2.97% or 1,205.75 points to hit an intraday low of 39,338.75.

All the 10 shares in the NIFTY IT index, barring Coforge Ltd., were trading lower with L&T Technology Services being the top loser, nearly 5%. LTI Mindtree, Wipro, Mphasis, Infosys, HCL Technologies, Tata Consultancy Services (TCS), Persistent Systems and Tech Mahindra also dropped between 1.6%- and 4%.

The NIFTYIT index was the top sectoral loser on the NSE, data from the exchange showed.

The sharp downfall in IT stocks came after reports suggested that business activity and consumer sentiment are deteriorating in the US, a key market for Indian IT companies.

Indian IT companies earn a significant amount of revenue from the US, and fears of an economic downturn in the US directly affects the revenue of IT companies. The latest economic data signalled a sharp slowdown, raising fears of reduced client spending on IT services.

The US Composite Flash PMI Output Index, a key gauge of business activity, plunged to 50.4 in February from 52.7 in January, to hit its lowest level in 17 months. The decline, from a three-year high of 55.4 in December, suggests a steep deceleration in economic growth, according to Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.

The new trade tariffs proposed by US President Donald Trump on Chinese imports are adding to the uncertainty about spending in the IT sector. Trump, who previously imposed a 10% tariff on all Chinese imports, is now considering 25% tariffs on automobiles, semiconductors, and pharmaceutical imports.

The US has also implemented deep cuts in federal spending, leading to layoffs across various government agencies under the Department of Government Efficiency (DOGE), adding concerns for the IT industry.

Silver Lining

Despite the ongoing concerns for the IT sector, the IT industry body NASSCOM remains cautiously optimistic. It has projected that sectoral revenue will grow by 5.1% in FY25 to $282.6 billion. It also expects the industry to surpass $300 billion in revenues by FY26, reflecting a 6% year-on-year rise.

“This is a good outcome broadly given everything happening around us,” said NASSCOM President Rajesh Nambiar at the NASSCOM Technology Leadership Forum.

The sector also continued to expand its workforce, adding 1.26 lakh new employees in FY25, taking the total tech workforce in India to 58 lakh, according to NASSCOM projections.