- Shares of Indian IT majors declined following weak revenue guidance from global tech giants
- Nifty 50 fell 0.27% and BSE Sensex declined nearly 0.3% amid bearish sector sentiment
- Weak forecasts from Accenture and cautious corporate tech spending pressured IT stocks
Shares of Indian information technology (IT) majors such as Tata Consultancy Services (TCS), Infosys Ltd., Wipro, among others in the Nifty IT pack are trading lower in trade on Tuesday, July 21, after weak revenue guidance by global tech giants and high valuations spooked investors amid a bearish sector sentiment. This comes as the Indian stock market extended declines to trade at day's low after fluctuating between gains and losses in morning trade. The NSE Nifty 50 benchmark fell as much as 0.27% to 24,173.55. The 30-share BSE Sensex declined nearly 0.3% or 257 points to 77,451.18.
According to domestic brokerages, Indian IT stocks are falling primarily due to weak revenue forecasts from global tech bellwethers like Accenture, cautious corporate tech spending, and the disruptive threat of generative artificial intelligence (AI) to traditional outsourcing models. High sector valuations and global macroeconomic uncertainties continue to weigh on investor sentiment.
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On Tuesday, shares of TC opened at Rs 2,245.10 against a previous close of Rs 2,251.10 and pared gains to hit an intraday low of Rs 2,219 apiece on the NSE. The stock last traded 1.16% lower at Rs 2,226.90 apiece on the NSE. This compares to a 0.29% decline in the Nifty 50 benchmark. Similarly, shares of Infosys opened at Rs 1,080 against a previous close of Rs 1,087.10 and extended losses by upto 25 to hit an intraday low of Rs 1,067.20 apiece on the NSE. Shares of Wipro also fell 2%.
Why are IT stocks in red?
According to analysts, the sharp correction in frontline IT companies, including Infosys, Wipro, LTIMindtree, TCS has brought valuations closer to historical averages. However, earnings risks remain because clients continue to delay spending decisions and sales cycles remain extended. Also, brokerages highlighted that major global consulting and IT players have recently trimmed their revenue and earnings guidance, signaling weaker-than-expected demand and a delay in large enterprise tech projects.
Indian IT firms (like TCS and Infosys) share similar business models and clients, hence these warnings immediately trigger sector sell-offs. Investors are concerned that automation could replace traditional, headcount-based revenue models, allowing clients to accomplish software and operational tasks without requiring large, outsourced teams. Large IT services companies have flagged cautious client spending and longer deal cycles, prompting investors to cut earnings expectations.
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