Indian IT stocks down by 2% today: What's the reason?
What's the story
Shares of major Indian IT companies fell today, following Tata Consultancy Services' (TCS) disappointing revenue report and cautious outlook. The broader Nifty IT index fell over 1%, making it the worst-performing sectoral index of the day. Firms such as Wipro, Infosys, HCL Technologies, Tech Mahindra, and LTIMindtree saw their shares decline by 1-2%.
Market reaction
How other IT stocks reacted
The impact of TCS's muted June quarter results was felt across the tech sector. Shares of TCS fell 1%, trading at ₹3,233.70 on the NSE. Infosys shares dropped 1.8% to ₹1,566.50 while Wipro shares fell 1.2% to ₹255.15. HCL Technologies saw a decline of 1.5% in its share price (₹1,613), LTIMindtree slipped by 2% (₹5,101), and Tech Mahindra was down by 1.5%.
Financial performance
Nuvama cuts TCS target price
Despite a strong bottom line and deal wins in Q1 FY26, TCS's revenue quality and commentary has disappointed investors. The firm reported a 3.1% year-on-year decline in constant currency revenue, partly due to a "sharp ramp-down in BSNL contracts." Nuvama maintained its 'buy' call but cut its target price from ₹4,050 to ₹3,950 for the stock.
Strategic response
TCS acknowledges demand contraction
TCS CEO K Krithivasan acknowledged "the continued global macro-economic and geo-political uncertainties caused a demand contraction." However, he also highlighted "robust deal closures during this quarter." He said the company is helping clients "through cost optimization, vendor consolidation and AI-led business transformation." Despite a $9.4 billion total contract value (TCV) for the quarter—up 13.3% YoY—the investors focused on soft sequential revenue and uncertain near-term demand.
Forecast
How did brokerages react?
Brokerages have responded to TCS's results by lowering their expectations. Antique maintained its 'buy' rating on TCS but cut its target price by 3% to ₹3,725 due to "near-term pressures." It also reduced FY26 and FY27 EPS estimates by 2-3%. Motilal Oswal kept its 'buy' stance with a price target of ₹3,850 but flagged that "most of the Q1 revenue decline was led by BSNL, but international business also slipped 0.5% amid macro uncertainties."