Nifty IT index slips 4%; TCS hits 52-week low, TechM, Persistent down 6%

The IT sector is witnessing weaker deal momentum and cautious client spending, according to analysts

Shares of information technology (IT) companies came under pressure, with the Nifty IT index falling 4.2 per cent on the National Stock Exchange (NSE) on Friday, amid concerns over sluggish global economic growth.

 

US markets nosedived on Thursday, weighed down by a slump in chipmaker Nvidia stocks, whose quarterly report failed to reignite Wall Street’s AI rally.

 

The Nifty IT index saw the steepest decline among sectoral indices.

 

Tata Consultancy Services (TCS), the sectoral giant, hit a 52-week low of ₹3,457 before closing at ₹3,483, down 3.6 per cent. This marks the lowest level for the stock since November 2023. Tata Technologies (was down 6.08 per cent at ₹671 apiece) and Tata Elxsi (fell 2.73 per cent at ₹5,411 apiece) also hit their respective 52-week lows on the NSE during intra-day trade.

 

The IT sector, a traditional growth driver, is facing weaker deal momentum and cautious client spending, according to analysts.

 

“Stock markets dislike uncertainty, and uncertainty has been on the rise ever since Donald Trump was elected US president. The series of tariff announcements by Trump has impacted markets, and the latest announcement of an additional 10 per cent tariff on China confirms that Trump will use the early months of his presidency to threaten countries with tariffs, negotiating for a favorable settlement with the US. How China responds to the latest round of tariffs remains to be seen,” said Dr V K Vijayakumar, chief investment strategist at Geojit Financial Services.

 

While uncertainty around elections subsided after the US presidential election, policy changes under the Trump administration have reintroduced risks. Analysts at Kotak Institutional Equities noted that client conversations so far don’t indicate a significant shift in tech spending priorities due to the perception of heightened uncertainty under the Trump administration.

 

“The slower spending recovery and near-term risks from AI adoption lead to downside risks to revenue growth, margin estimates, and stock multiples. The weak business momentum prompts us to maintain a cautious view on engineering research and design companies, despite a decline of 18-36 per cent in stock prices over the past year,” the brokerage firm said in an IT services sector report.

 

Several players expressed cautious optimism in their October-December quarter (Q3) commentary, citing improvements in short-duration deals and continued discretionary spending in the BFS sector.

 

Part of this optimism was based on reducing uncertainty with the new US administration taking office, but the situation has since evolved differently. Tariffs, counter-tariffs, inflation, and rate cut trajectories have worsened the outlook, analysts at JM Financial Institutional Securities noted.

 

“In our recent interactions with IT services players, we observed sporadic instances of pauses in transformation programs by large US banks. If this trend spreads, it could put the Street’s (and our) FY26 growth estimates at risk,” the brokerage firm warned in a sector report.