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On Wednesday, Nifty IT index entered “bear market territory,” having corrected more than 20% from its all-time high; Know what analysts say
Why are IT stocks falling today?
Why Are IT Stocks Falling Today? On Wednesday, March 12, the Nifty IT index entered “bear market territory,” having corrected more than 20% from its all-time high in December last year.
All stocks within the Nifty IT index are currently in the red, with names like LTIMindtree and Mphasis seeing corrections of over 30% since December 13, 2024.
Even major Nifty 50 players such as Infosys and TCS have seen their shares fall by over 20% in the last three months. The index had hit a record high of 45,995 on December 13, 2024.
On Wednesday, the Nifty IT index dropped by nearly 2.4%, with all 10 stocks declining. Infosys, TCS, Wipro, and HCLTech were among the biggest losers. By 9:50 am, Infosys was down by 3.5%, Wipro over 3.35%, HCLTech by more than 2.4%, and TCS nearly 2%. This sharp fall in IT stocks contributed to broader market weakness, making investors anxious.
Market experts believe two major factors triggered the sell-off. One is the potential return of Donald Trump to the White House, creating uncertainty around his trade policies. A victory for Trump could lead to protectionist measures, which may hurt Indian IT firms that derive a large portion of their revenue from the US.
The second factor is concerns over US inflation data, which is set to be released later today. If inflation remains high, the US Federal Reserve may delay interest rate cuts, potentially slowing global economic growth, which could, in turn, reduce IT spending by key clients.
Brokerage firm Motilal Oswal noted that sentiment has turned cautious from January to March, with enterprises taking a “wait-and-watch” approach. While capital expenditure remains a priority, clients have not yet increased spending on services.
Motilal Oswal downgraded Infosys to “neutral,” Wipro to “sell,” and L&T Technologies to “neutral,” citing concerns about valuations. The firm also noted that a meaningful recovery in discretionary spending for FY26 is no longer as certain as it once seemed. However, LTIMindtree and TCS remain their preferred picks due to a favorable risk-reward balance.
Earlier, Morgan Stanley downgraded Infosys to “Equalweight” and reduced its price target to Rs 1,740 from Rs 2,150. It also lowered price targets for other stocks, including Coforge, TCS, and Wipro, stating that IT stock valuations are still in line with their five-year average despite the recent declines.
As of Wednesday, the Nifty IT index was down over 3%, making it the top sectoral loser. It has gained only four times in the last 23 trading sessions, starting from February 7.
Disclaimer:Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.