The Nifty IT index dropped 3.9%, against the 0.8% decline in the benchmark Nifty. Persistent Systems, Coforge, Infosys, LTM (erstwhile LTIMindtree) and MphasiS fell between 3% and 5%.
“The sell-off was triggered by HCL Technologies’ weak Q4 performance and subdued guidance, but the broader driver remains poor demand visibility across the sector,” said Harsh Thakkar, research analyst at Samco Securities. “Slower discretionary spending, delayed deal conversions, and limited near-term AI monetisation are weighing on growth expectations.”
HCL’s share slump is the sharpest among peers in the fourth quarter results season as the earnings of TCS, Wipro and Tech Mahindra have been resilient so far. The earnings miss at HCL was largely because of client-specific challenges, particularly in telecom, said Sushovon Nayak, research analyst at Anand Rathi Institutional Equities.
“Tech Mahindra, which derives nearly a third of its revenues from telecom, reported a relatively strong performance,” he said. “The focus now shifts to Infosys’ earnings for further cues.”
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focus shifts to infosys While HCL Tech had a weak quarter, TechM did relatively well; Sector weakness offers a chance to buy some beaten-down stocks, say analysts
Infosys is set to announce its fourth quarter number on Thursday.
HCL’s investor popularity compared to its peers went against its shares on Wednesday.”HCL Technologies was trading at a valuation premium to larger peers Tata Consultancy Services and Infosys, but has delivered weaker growth relative to them,” said Sumit Pokharna, vice-president, Fundamental Research, at Kotak Securities.
“Management highlighted slower deal activity amid geopolitical uncertainty, alongside price deflation or reduced deal sizes, as clients prioritise efficiency and cost optimisation, driven by AI adoption. The extent to which these trends impact the broader industry remains to be seen.”
IT stocks have been under pressure since the beginning of 2026 as worries about AI replacing traditional software products, especially after Anthropic announced advanced tools, sparked a sell-off in the sector worldwide.
So far this year, the Nifty IT index is down 19.5%, with all its components down 8-26%, except for Oracle Financial Services Software, which gained 5.7%. The Nifty shed 6.8% in this period.
Buy on Dips?
The weakness may be an opportunity to buy some of the beaten-down stocks in the sector.
“For medium to long-term investors, the sector is offering accumulation opportunities on dips,” said Dhanshree Jadhav, analyst – Technology at Choice Institutional Equities. She prefers midcap IT companies over large caps.
Nayak prefers LTM and Infosys in large caps, and Persistent Systems and Mphasis in midcaps.
“While the industry may continue to face revenue pressures over the next year, selective opportunities and new revenue streams could offer some support,” he said.
Pokharna prefers Infosys, TCS, and Tech Mahindra over HCL.
Investors bullish on IT stocks must, however, brace for sharp swings.
“Volatility is likely to persist over the next few quarters as earnings remain range-bound and sentiment stays guidance-driven,” said Thakkar of Samco.
“Investors should avoid aggressive buying and instead adopt a staggered approach, focusing on quality companies, while remaining cautious on those with limited earnings visibility until a clearer demand recovery emerges.”