HCLTech shocker drags IT stocks: Nifty IT tumbles nearly 4% as weak outlook rattles Street

India’s information technology pack came under heavy selling pressure in Wednesday’s trade, dragging the Nifty IT Index sharply lower after disappointing earnings and guidance from HCLTech spooked investor sentiment.

By mid-day, the IT index was down 3.8 per cent at 30,515, making it the worst-performing sector on the market. This was in stark contrast to the broader Nifty 50, which slipped a relatively modest 0.5 per cent.

Broad-based decline across IT majors

Selling was widespread, with 9 out of the 10 constituents of the index trading in the red. HCLTech emerged as the biggest laggard, plunging 10 per cent to Rs 1,304 after its quarterly performance and outlook disappointed the Street.

Other frontline IT stocks also saw sharp cuts. Tech Mahindra dropped over 5 per cent to Rs 1,424, while Infosys, TCS, Coforge and Persistent Systems declined between 2 and 5 per cent.

Bucking the trend, Oracle Financial Services Software managed to stay in the green, rising 1.6 per cent.

HCLTech results, weak guidance trigger rout

The sharp fall in IT stocks was largely triggered by HCLTech’s Q4FY26 earnings and cautious outlook. The company reported a 4.20 per cent year-on-year rise in net profit to Rs 4,488 crore, while revenue grew 12.34 per cent to Rs 33,981 crore.

Despite the growth, management commentary dampened sentiment. The company flagged a volatile demand environment marked by tariff uncertainties and a decline in discretionary spending. It guided for FY27 revenue growth of just 1–4 per cent in constant currency terms — a range that fell short of market expectations.

CEO C Vijayakumar acknowledged that performance during the quarter was below expectations, citing delays in decision-making and reduced discretionary spending across key segments.

Brokerages turn cautious

Analysts were quick to cut estimates and ratings following the results.

According to JM Financial, both revenues and margins came in below expectations, while softer guidance and the potential impact of AI-driven deflation — estimated at 3–5 per cent — have raised concerns about the sector’s growth outlook. The brokerage downgraded HCLTech to ‘Reduce’ and cut its target price to Rs 1,350.

ICICI Securities also trimmed its target to Rs 1,370 while maintaining a ‘Hold’ rating, highlighting multiple headwinds including telecom client budget cuts, weak exit run-rate, macro uncertainty and rising risks from AI-led pricing pressure.

Persistent Systems adds to worries

Weakness was not limited to HCLTech. Shares of Persistent Systems also declined nearly 5 per cent after reporting softer-than-expected Q4 numbers. Revenue growth and margins both missed estimates, with EBIT margin slipping to 16.3 per cent.

While analysts remain positive on the company’s long-term growth prospects, particularly its pivot towards AI-led opportunities, near-term concerns around margins and valuations weighed on the stock.

Sector outlook remains under pressure

The latest earnings season signals that India’s IT sector continues to grapple with a challenging macro environment. Slower discretionary spending, client-specific ramp-downs, and emerging risks from AI-led deflation are beginning to reflect in both earnings and guidance.

With multiple brokerages cutting estimates and flagging limited growth visibility for FY27,investor sentiment towards IT stocks is likely to remain cautious in the near term.