IT stocks reverse early gains: TCS, Infosys, HCL Tech drag Nifty IT down amid selling pressure from Asian markets

Indian IT sector stocks reversed their morning market gains during the trading session on Thursday, August 26, as investors switched to profit booking on eroding tech momentum amid selling pressure from the benchmark indices in the Asian markets.

NSE data showed that heavyweight IT stocks like TCS, HCL Tech, Infosys, among others, dragged down the sectoral benchmark Nifty IT index by 0.42%, wiping out the early market gains to a low of 30,191.50 points on Thursday, in comparison to 30,318.85 points at the previous close.

Before the index dropped into the red zone, Nifty IT was trading 0.85% or 258 points higher at 30,576.95 points after the opening bell on NSE due to the positive momentum in the market and investors reacting against the backdrop of Nvidia and Salesforce earnings.

Global chipmaking firm Nvidia beat its revenue and earnings expectations, which, along with the positive forward guidance, acted as a catalyst on August 27. However, this was later offset by profit booking and a cautious stance of investors ahead of the US Fed Chairman’s speech in Jackson Hole on Thursday.

Although the gains were limited, experts suggest that global investors have always seen Indian IT stocks as somewhat of a defensive bet amid the AI valuation and spending concerns in the global market.

IT stocks in focus today

Asian markets today

Indian IT stocks followed the Asian market setup as tech and chipmaking stocks declined, with investors booking profits against the backdrop of hawkish regional central bank signals and fading momentum from Nvidia earnings.

MarketWatch data showed that Japan’s Nikkei 225 was down 0.30% to 66,064.22 points, Hong Kong-based Hang Seng lost 0.35% to 25,562.82 points, and Singapore’s FTSE was down 0.68% to 5,882.48 points on Thursday’s market.

In contrast, South Korea’s KOSPI was up 0.96% to 6,873.76 points, and China’s Shanghai Composite gained 0.82% to 3,944.54 points as of the trading session on August 27.

How did Nvidia & Salesforce perform in Q2?

Filings showed that AI chipmaking giant Nvidia Corp. recorded a 106% year-on-year (YoY) surge in revenues to $96.2 billion, and an 18% sequential revenue growth in comparison to the first quarter of the calendar year.

“AI has reached its inflexion point. It’s doing useful work. Its tokens are productive and profitable. Now, compute is revenue. And demand is accelerating,” said Jensen Huang, founder and CEO of Nvidia Corp.

The company’s strong Q2 earnings performance surpassed Wall Street expectations due to healthy demand for its AI-focused chips. Looking ahead, Nvidia’s management predicts revenue of $108 billion in the upcoming quarter, reinforcing investors' optimism around continued AI spending.

Meanwhile, the technology solutions firm Salesforce reported an 11% YoY growth in its Q2 revenues to $11.35 billion, while raising its FY27 revenue and earnings guidance with key support from the company’s AI offerings to its clients.

Indian IT stocks which have exposure to AI, cloud, data and digital transformation spendings are usually among the ones to benefit from the positive sentiment of these global chipmaking and tech majors.