Shares of Indian IT giants Infosys Ltd and Wipro Ltd plummeted to near six-year lows in early trade on Wednesday, September 30, 2026. The IT sector continues to face significant pressure, with analysts flagging a challenging demand environment and muted growth prospects for the upcoming September quarter (Q2 FY27) earnings.
Key Factors Driving the Downturn
The sustained pressure on IT stocks is attributed to several factors:
- AI-led Disruption: Growing concerns about how artificial intelligence will impact traditional IT services and potentially deflate existing work.
- Muted Earnings Growth: Expectations of subdued financial performance from major IT companies.
- Cautious Management Commentary: Reserved outlooks from company leadership regarding future growth.
- US Interest Rate Hikes: Anticipation of further rate increases in the US, which can impact global tech spending.
- Foreign Institutional Investor (FII) Selling: Continued divestment by foreign investors from Indian IT equities.
Infosys shares dipped below the Rs 1,000 mark, touching Rs 993.15, having previously hit an intraday low of Rs 980.30 the day before. These levels were last observed in October 2020. Wipro also saw its shares decline to a six-year low of Rs 156.60 before a slight recovery.
Brokerage Outlooks and Recommendations
Ahead of the Q2 FY27 earnings reports, leading brokerages have shared their views:
Kotak Equities' Assessment
Kotak Equities indicated that demand conditions have neither improved nor deteriorated since the June 2026 quarter, projecting another muted quarter for large IT companies. For Infosys, Kotak anticipates a potential guidance cut, assigning a fair value of Rs 1,200.
Kotak highlighted several areas for investor focus regarding Infosys, including reasons for revenue growth underperformance in FY27, retention of mega deals, the impact of macro weakness and AI-led deflation, and the conversion pace of GenAI pilots to scaled deployments. They also emphasized monitoring margin-defence strategies amid pricing pressure.
For Wipro, Kotak assigned a 'Sell' rating with a fair value of Rs 150, expecting revenue growth guidance between (-)2 percent and 0 percent. Investors are urged to consider Wipro's AI strategy, measures to offset AI-related deflation, pricing pressure in renewal deals, and timelines for growth to align with peers.
JM Financial's Stance
JM Financial has maintained an 'Add' rating on Infosys, setting a target price of Rs 1,130. Conversely, for Wipro, JM Financial reiterated its 'Reduce' rating with a target price of Rs 160.
“Demand conditions have neither improved nor deteriorated from the June 2026 quarter and we expect another muted quarter for large IT companies,” stated Kotak Equities, underscoring the ongoing challenges facing the sector.
The current market sentiment reflects a cautious approach towards the IT sector, as companies navigate evolving technological landscapes and macroeconomic uncertainties.