IT Stocks Under Pressure As Infosys, HCLTech Share Price Tumbles — Here's Why

The Indian IT sector has been under pressure on Monday's trade, due to various factors, including a CLSA note which had raised caution on the sector heading into the Q3 earnings season.

The sector is down almost 2%, led by a sharp fall in shares of Infosys and HCLTech, with both counters falling more than 3% in trade. In fact, all stocks in the Nifty IT index are trading with cuts on Monday.

This has led to Nifty IT emerging as the biggest laggard for Nifty 50, with the sector negatively contributing 30 points to the index's fall.

While Infosys and HCLTech are down around 3%, the likes of TCS, TechMahindra and Persistent are also facing major drawdowns.

CLSA's note on IT sector heading into the earnings season has played a key role in putting pressure on the sector.

As mentioned earlier, the brokerage firm had turned cautious on the sector, notably reducing constant currency growth estimates for largecap companies.

CLSA had also lowered its stance on counters such as HCLTech and Tech Mahindra.

Another key factor weighing on Indian IT is the slew of AI-related announcements in Japan and other Asian countries, leading to fears that Indian IT may be falling behind in the artificial intelligence race.

Although NDTV Profit reported earlier this month that Indian IT is rapidly pivoting towards AI, the sector still lags behind most countries and is often seen as an anti-AI hedge.

All of these factors have led to technical bearish sentiment on the Nifty IT, which has emerged as the biggest losing sector in trade on Monday.