Indian information technology (IT) stocks witnessed significant selling pressure in Wednesday's trading session, halting a recent recovery rally. The broader Nifty IT index plunged 4.67% in early trade, reflecting the widespread weakness across the sector.
Major IT Firms See Steep Declines
Several prominent IT companies led the market downturn. Tata Consultancy Services Ltd (TCS) saw its shares fall by 7.12%, while Infosys Ltd dropped 4.02%. Coforge Ltd slipped 4.31%, and LTM Ltd (formerly LTIMindtree) tumbled 6.79%. Persistent Systems Ltd cracked 5.29%, with Tech Mahindra Ltd, HCL Technologies Ltd, and Mphasis Ltd also declining by 4.93%, 3.66%, and 3.34% respectively.
This sharp correction followed a strong performance the previous day, when the sectoral index had surged over 4%, marking its largest single-day gain of the year.
Expert Outlook: Valuations Attractive Despite Short-Term Hiccups
Despite the immediate market volatility, several market experts maintain a constructive outlook on the IT sector from a medium- to long-term perspective.
Sharad Avasthi, Head of Research (PCG) at SMIFS, noted, "The valuations of IT companies are attractive at current levels. We are bullish on the sector, and it is a good contra bet to have. There could be short-term hiccups, but large-cap names such as TCS and Infosys, along with players like Cyient, Hexaware Technologies and Coforge, could be added. At these valuations, I don't think investors should be unnerved about buying into the sector."
On the technical front, Ravi Singh, Chief Research Officer at Master Capital Services, indicated that the IT sector continues to show a positive structure, with buying support emerging during declines. He emphasized that future movements would largely depend on US economic data, interest rate expectations, and management commentary regarding client spending.
Jatin Gedia, Vice-President – Technical Research at Teji Mandi, anticipates the Nifty IT index to maintain a positive bias, potentially moving towards 32,300–32,500 levels in the short term. He identified the 29,700–29,500 zone as a likely support area for the index.