Nifty IT tanks 3%; Wipro, Infy slide up to 6% on Motilal Oswal downgrade

The Nifty IT index hit its lowest level since June 28, 2024, and has declined 17% thus far in the calendar year 2025, as compared to 5% decline in the Nifty 50.

Shares of information technology (IT) companies continued to remain under pressure with the Nifty IT index falling more than 3 per cent in Wednesday’s intra-day trade on growth concerns. The IT index hit an over 8-month low on concerns that the US economy may fall into a recession by the year-end amid President Donald Trump's tariff war with trading partners.

 

Meanwhile, Motilal Oswal Financial Services (MOFSL) downgraded Infosys to Neutral and Wipro to Sell. Share price of Wipro dipped 6 per cent to Rs 262.40, while, Infosys shares slipped 5 per cent to Rs 1,580.10 on the National Stock Exchange (NSE) in intra-day trade.  The brokerage firm set Infosys’s target price of Rs 1,650 per share and Wipro’s at Rs 240 per share. For TCS, MOFSL set target price of Rs 4,050 per share.

 

The domestic brokerage firm in IT sector report said that six months on, US rate cut chances have declined, and geopolitical/ tariff risks are weighing on stability. Sentiment has turned cautious, with enterprises taking a "wait-and-watch" stance. GenAI adoption is progressing but not yet boosting IT services revenue. Clients are still prioritizing capex over services spending, making FY26 discretionary spending uncertain.

 

Almost all six large-cap IT services players today trade at the same valuations. According to historic trend; TechM and HCL are certainly in uncharted territory, but Infosys and Wipro have not been able to sustain valuation parity in the past, the brokerage firm said.  ALSO READ: At what level does IndusInd Bank stock become a Buy? What analysts say

 

However, analysts think this valuation setup favors TCS the most. While the growth has been poor over the past 2-3 years, the stock has corrected by 20 per cent over the past six months, and has underperformed most large-cap IT names. As growth becomes uncertain across the board though, analysts believe TCS could be in business and margin expansion could lead to better or at-par earnings growth to other peers.

 

At 10:39 AM; Nifty IT index, the top loser among sectoral indices, was down 3.4 per cent to 36,128.75. In comparison, the Nifty 50 was down 0.24 per cent at 22,443.10.  The IT index hit intra-day low of 36,050.95, its lowest level since June 28, 2024. Thus far in the calendar year 2025, Nifty IT index has underperformed the market by falling 17 per cent, as compared to 5 per cent decline in Nifty 50.

 

Besides, Infosys and Wipro, HCL Technologies, Persistent Systems, Mphasis, LTIMindtree, L&T Technology Services, Coforge, Tech Mahindra and Tata Consultancy Services (TCS) were down between 2 per cent and 4 per cent in intra-day trade.

 

According to MOFSL, Nifty IT P/E remains at elevated premium to Nifty P/E despite the recent corrections; its current premium of 37 per cent is still higher than last 5 year average (which includes COVID highs).  ALSO READ: Analysts cautiously optimistic on Tata Motors amid JLR vol concerns in FY26

 

Meanwhile, the recent comments from EPAM, Globant, and Endava have dampened hopes for a swift recovery in discretionary spending during 1HCY25. This contrasts with the brokerage firm’s earlier expectations, when channel checks indicated a revival in short-cycle deals.

 

“The short-term volatility is likely to delay discretionary spending recovery, prompting us to temper our expectations for a meaningful FY26 rebound, particularly for large-caps. We believe getting our positioning right may reap more rewards than predicting when clients resume spending,” MOFSL said.