There was a time when Infosys and TCS were the undisputed leaders of the tech sector. Their results were most eagerly awaited. TV channels vied with each other to get their officials on air to discuss each quarterly number, option traders were most active on the day preceding the results as the IVs would spike sharply (playing for the expected IV crush), the numbers would be discussed endlessly in press and digital channels etc. etc. But those times are now steadily disappearing. It would appear, as the stocks now consistently underperform the rest of the sectors.
Nifty IT index peers (Weekly)
Photo Credit: CK Narayan
Chart 1 is a relative performance chart of six top names from the sector - TCS, Infosys, HCL Tech, Wipro, Persistent, Coforge. These are plotted relative to the Cnx IT. In the past, it can be noted that TCS and Infosys were consistently outperforming the IT index. Starting from around April 2024, mid cap leaders such as Persistent and Coforge began a process of improvement and caught up with the top guns by the time the sector index peaked around December 2024.
What is interesting to see in this relative performance chart is the aftermath into 2025. In the initial decline into the year, all stocks fell, but note how both Persistent Systems and Coforge managed to hold their own (see the encircled area in the chart.) while the top guns Infosys and TCS bit the dust, with the most pronounced underperformance coming from TCS.
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If one looks at ownership in the stocks, we find that FIIs have been steadily decreasing their positions in almost all the names except the midcap (Persistent, Coforge). The DIIs have been more or less consistent in continuing their holdings even as they seem to have increased their holdings in Infosys over the last two years (from 33% in 2023 to 42% in 2025). TCS has actually seen hardly any addition by the funds.
An interesting finding is how the PE ratios of these stocks have changed with time. The table shows this in some detail.
| Stock | PE in 2021 | PE in 2025 | Change |
| Infosys | 39x | 22x | -43.5% |
| TCS | 40x | 22x | -45% |
| HCL Tech | 33x | 26x | -21% |
| Wipro | 32x | 20x | -37.5% |
| Persistent Systems | 60x | 60x | Nil |
| Coforge | 68x | 50x | -11.7% |
Two things become visible right away. The 'midcap' names commanded a significantly higher valuation five years ago compared to the leaders. So, obviously, the market was already pricing in growth possibilities here. The overall valuations accorded to the leader stocks has dropped sharply over the years while that of the midcap has been hardly trimmed. That indicates the market still is viewing those as being a lot better in prospects even as of now. Coforge had taken a dive recently and had that not been the case, its valuation would probably be even higher.
That would that mean the midcap names (these two and possibly others too) is the place to hunt in IT? To find out, I took another five stocks from mid space and compared those to Persistent (the top performer in the previous check). Here is how it looks. See Chart 2.
IT midcaps Vs Persistent Systems
Photo Credit: CK Narayan
Here we find that all the names (Coforge, Mphasis, TechM, LTIM, BSoft) have fared much worse than the major one (Persistent). So, it doesn't seem like there is any shift of preference here. If one checks the valuation aspect, we find almost a repeat of the earlier story - a big drop from lofty valuations earlier (55-60x) to much lower ones (25-30x) now.
In all the names - big and small - the one common thread is that the FIIs have been exiting but interestingly and the DIIs have been picking up stake in most names! Another interesting find is that the public holding in all of these stocks has remained almost constant through the years! This clearly shows that the FII sell off has been absorbed by the DIIs. Not really surprising considering that many of these names had high dividend payouts, were cash rich, had stock buybacks etc. which ensured that the downside was limited. So, it seems, that IT had become the defensive bet in a largely difficult year.
Given that the public holding in all the stocks had not increased, it can be estimated that most of their interest in these stocks (many of which are part of F&O group as well) has largely been trading in nature. The only exception among the whole lot is Coforge where FII holding increased from around 21% to about 34% in the last 4-5 years as did DIIs who went from 26.7% holding to @55% by 2025. Now, this is a staggering 90% holding by fund guys in the stock!! You don't find that metric in any of the other stocks. This is because holder Hulst BV sold off its entire stake in 2023 and the entire stake has been picked up by institutions. This prompted another relook at the prospects of the two and is shown in Chart 3.
Persistent Vs Coforge
Photo Credit: CK Narayan
This happened owing to a fund-raising plan that the company announced in end December 2025. The market did not receive it well and stock was trounced a bit. A risk of further dilution due to the fund raise, the company's cash conversion guidance is the weakest among its peers, and concerns over whether the 70% free cash flow / PAT guidance will be under threat. Further, the high valuations that the stock has enjoyed doesn't leave much room for any error as expectations are built sky high.
Now this is the downside of a high institution ownership in a stock. When they become unhappy over something, they hit the 'Sell' button and since everyone else is loaded up on the stock, it becomes tough to find new buyers and the stock therefore has a big fall. Chart 4 shows Coforge's weekly trend.
Coforge trend (Weekly)
Photo Credit: CK Narayan
The stock is really treading some ice here-thin or otherwise. Despite the high valuations, prices formed a triple high- suggesting a possible distribution. A rising support trendline has been broken with the most recent decline. The Oscillator wear a bearish look. The RSI shows a possible range shift towards bearish. That the trend is out is shown by the collapse of the ADX line. Now the DI lines re-crossed negative.
So, technically, it is touch-and-go time for Coforge here. This makes the upcoming results, and the commentary along with, particularly important. As stated earlier, there is very little room for any error and the high institutional ownership also gives it very little wiggle room, if there are any disappointments.
Holders of Coforge are therefore warned by the charts not to be complacent and be very alert to set suitable stops. Earnings are scheduled for January 22. If that passes off peaceably, long holders can breathe easy. But, the more prudent course of action may be to buy some protective hedge. If nothing happens, the hedge can always be unwound at a small loss.
CK Narayan is an expert in technical analysis, the founder of Growth Avenues, Chartadvise, and NeoTrader, and the chief investment officer of Plus Delta Portfolios.
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