Shares of information technology companies were under pressure on Friday as they extended their decline for the second month and hit nearly 10-month low. This comes after US President Donald Trump unleashed a tariff war that may slow growth in the world's largest economy and spark inflation.
In addition, the index has been in bear market territory as it fell 26.72% from its high in December. The Nifty IT fell over 3% on Friday, extending its 3.6% decline on Thursday. This compared to 1.2% decline in the benchmark Nifty 50.
The index has fallen nearly 8.45% this week and over 22.36% this year, making it one of the worst performing sectors. The recent decline in the sector can be credited to concerns that the US economy may fall into a recession by the year-end due to President Donald Trump's tariff implementation. With investors exiting tech stocks and fear of tariffs mounting, the stocks could take a further hit.
Midcap stocks like Coforge Ltd., Persistent Systems Ltd., and LTIMindtree Ltd. led the decline.
Coforge lost over 7% intraday, while Persistent Systems sunk 6.15%. LTIMindtree shares declined 5.07% during the session. Mphasis Ltd. was down nearly 5% on Friday.
In comparison, shares of Tata Consultancy Services Ltd., Tech Mahindra Ltd., Infosys Ltd., and Wipro Ltd. fell nearly 3%. HCL Technologies Ltd. stock was also down nearly 3% at Rs 1,427 per share.
Chances of financial year 2026 being a complete washout for the Indian IT sector are increasing, according to JPMorgan. However, it notes that valuations may be nearing a bottom, especially for top-tier companies like TCS, Infosys, and HCL Tech, which return most of their free cash flow and profits to shareholders.
Current dividend and FCF yields suggest that the bottom for these large-cap names may be just 6–14% away from current levels. In contrast, leading midcaps like Persistent Systems and Coforge are still 25% and 13% away from their respective bottom valuations.
JPMorgan sees buying opportunities emerging in the tier 1 names sooner, while it recommends a more tactical approach for midcaps—suggesting investors wait closer to earnings announcements. The firm expects midcap multiples to react sharply to any negative commentary from TCS or Infosys. Overall, despite the sector approaching more attractive levels, JPMorgan advises maintaining a lighter positioning in Indian IT for now.
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