The Indian stock market started the year on the back foot. Concerns over valuations amid muted earnings, and an unpredictable US President steering economic policy weighed on investor sentiment. Dr. V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, “Stock markets dislike uncertainty, and uncertainty has been rising since Donald Trump was elected US president. The series of tariff announcements by Trump has impacted markets.”
The Nifty 50 fell 7.9% from the beginning of 2025 until 6 April. However, optimism over the US-India trade deal helped the index recover 10.8% from its low of 21,758.4 on 7 April, bringing the year-to-date or YTD gain to 2.5%.
The Nifty IT index, which tracks the performance of Indian IT companies, has fallen by 18% from its peak of 46,088 on December 13, 2024.
The Nifty IT index heavyweights include Infosys with a weight of 27.6%, Tata Consultancy Services (TCS) at 23.3%, HCL Technologies at 10.7%, Tech Mahindra at 9.4%, and Wipro at 7.7%.
India's IT industry contributes 7.5% to the GDP and relies heavily on Western markets. The US and Europe account for 54% and 31% of software exports. Any turmoil in these regions directly affects Indian IT. Currently, the US has not imposed tariffs on the Indian IT sector, but increasing tariffs on other sectors will raise costs overall for the tech industry’s American clients. This could lead to postponed investments, extended deal cycles, and delayed projects.
In this edition of the Chart of the Week, we analyse the YTD performance of IT stocks and the reasons behind their weak performance.
Muted overseas growth leads to revenue misses for Infosys and TCS
Infosys and Tata Consultancy Services, the two giants of India’s IT sector, have seen their share prices fall sharply in 2025. Both companies missed revenue estimates in Q4FY25 due to cautious spending from their clients and tariff uncertainties. Infy and TCS derive over 85% of their revenue from the US and Europe, and both companies have revised their growth outlook for FY25.
In Q4FY25, Infosys missed revenue estimates by 2.7% due to delayed deals and lower billing for third-party services. The company also missed its FY25 revenue guidance by 80 bps, growing 4.2%.
The company’s revenue from the US dipped slightly, while revenue from other global markets dropped 4.5% YoY. However, net profit rose 3.3% QoQ, thanks to lower third-party expenses.
For FY26, management guided muted revenue growth to 3%, citing tighter client budgets due to tariffs, and extended decision cycles for discretionary spending. Salil Parekh, the Infosys CEO, notes, “Clients are cautious with discretionary spending, leading to delays in decision-making and slower deal conversions.” Infosys' share price has declined by 20.2% in 2025.
Morgan Stanley downgraded Infosys to ‘equal weight’ from ‘overweight’ and reduced the target price to Rs 1,740, following the Q4 revenue miss and concern over slowing growth.
Tata Consultancy Services' profit fell 1.2% QoQ in Q4, missing estimates by 3.7%. TCS shares have declined 15.1% year-to-date, due to weakness in North America, where the economic mood has shifted from optimism in the previous quarter to extreme caution.
In Q4, operating margin fell 30 basis points QoQ to 24.2% due to higher sales and marketing expenses and the execution of low-margin deals across the consumer business, manufacturing, and communications segments. These segments account for two-thirds of the company’s total revenue.
Kotak Institutional Equities has lowered its target price on TCS to Rs 3,800 from Rs 3,900, while maintaining a 'Buy' rating, citing weak quarterly performance, margin miss, and concerns over the demand outlook.
Growth cools for LTIMindtree and Tech Mahindra amid renewal delays
Other tech players are also feeling the pain. LTIMindtree and Tech Mahindra, seen as agile challengers in the IT space, are facing slowdown pressures in their business verticals. Rising client concentration risks and weak traction in telecom, consumer, and healthcare verticals have led to revenue shortfalls in FY25.
LTIMindtree shares are down 18.1% year-to-date. The company generates 89% of its revenue from the US and Europe, with its top 10 clients contributing about one-third of the total revenue. Its key client, Citigroup, reduced its reliance on external IT contractors to 20% from 50%, impacting LTIMindtree’s stock performance.
In Q4FY25, net profit rose 4% QoQ but missed estimates by 2.8% due to delays in executing deals and client-specific challenges. Revenue fell 0.5% short of expectations, impacted by headwinds in the consumer and healthcare verticals, which kept the full-year revenue and profit flat.
Tech Mahindra's profit grew 18.6% QoQ to Rs 1,166.7 crore, driven by lower subcontracting costs and a deferred tax gain. However, revenue rose marginally to Rs 13,384 crore, missing estimates due to delays in customer renewals, seasonal impacts, and macro uncertainty. These factors contributed to a 14.5% decline in its share price in 2025.
The company's telecom and manufacturing segments, contributing 50% of total revenue, saw muted growth due to high inflation and reduced client spending. Revenue from the US, which is half of the total revenue, declined by 5.9%.
Jefferies maintained an "underperform" call on the stock with a price target of Rs 1,260 per share, citing weak Q4FY25 revenue growth and high valuations.
Wipro signals caution, while HCL offers an upbeat forecast
Wipro and HCL Technologies hold contrasting forecasts for FY26. Wipro signals a cautious approach due to concerns over tariff impacts, while HCL is optimistic, supported by order backlogs despite challenges in profitability.
Wipro’s struggles continue in Q4, and its shares are down 20% YTD. The company reported subdued revenue growth due to delayed project ramp-ups in its healthcare, consumer, and technology & communication verticals and flat revenue from international markets, specifically from Europe and the Americas regions.
Its profit rose 6.4% QoQ, exceeding estimates, driven by a lower effective tax rate and higher yield from non-core operations.
The company generates the majority of its total revenue from the US and European markets. Management expects revenue to decline by 1.5% to 3.5% in Q1FY26, driven by rising US tariff policies and concerns over a global market slowdown.
Bernstein has an 'Underperform' rating on Wipro with a target price of Rs 200 per share, citing concerns over clients' cautious IT spending and subdued Q1FY26 guidance.
HCL Technologies generates 93% of its revenue from the US and Europe. In Q4FY25, revenue grew 1.2% QoQ to Rs 30,246 crore, in line with estimates, supported by gains in technology services, financial services, and telecom. However, profit declined 6.2% QoQ due to higher employee benefits and tax expenses. The company's shares have fallen 18.6% YTD.
The company’s new bookings reached $3 billion in Q4, driven by the engineering research and development (ER&D) vertical and AI services. For FY26, management expects 2.0% - 5.0% YoY revenue growth. C Vijayakumar, CEO of HCL Technologies, said, “Q4 showed growth in core verticals, and moderate revenue growth is expected in FY26. The focus will be on managing operational costs, improving efficiency, and expanding presence in emerging markets.”
Nuvama upgraded HCL Tech to ‘Buy’ with a target price of Rs 1,700, highlighting its strong performance amid macroeconomic uncertainty and Q4 results in line with expectations.
