Nifty IT Index Slides to 52-Week Low as Kotak Sees Stocks Dropping 35%

The Indian IT sector witnessed a sharp sell-off on Monday, April 7, with the Nifty IT index plunging to its 52-week low, dragging down major technology companies. Within just four months of reaching a 52-week high in December 2024, the index has reversed all gains and is now showing clear signs of stress amid fears of a possible recession in the United States.

Steep Decline in Nifty IT

The Nifty IT index recorded a steep fall of 4.55% on Monday, 12.58 PM. In the past three trading sessions, the index has declined over 5,000 points—amounting to more than 10% erosion in value. The pressure on IT stocks appears to be mounting, with four major companies—Mphasis (down by 6.7%), Infosys (down by 5.4%), TCS (down by 3.8%), and LTIMindtree (down by 3.82%)—currently trading at their respective 52-week lows.

The decline reflects broader market concerns around the future of discretionary spending in the global IT space, particularly from the US market, which accounts for a large share of revenue for Indian IT firms.

TCS and Infosys Take Major Hits

Tata Consultancy Services (TCS), the front-runner of the Tata Group, saw its stock tumble over 5%, wiping out over ₹60,000 crore in market capitalisation in a single session. TCS is currently in focus ahead of its March quarter results, scheduled to be announced on Thursday, April 10. Investors are watching closely to see if the results can offer any positive momentum in a weak market environment.

Infosys, another tech major, also saw its stock decline by over 5%, and its quarterly results are expected on April 17. LTIMindtree and Mphasis share prices were down by 3.8% and 6.6% respectively (April 7, 2025, 12.58 P.M), highlighting the extent of the damage across the sector.

Recession Fears Weigh on Sentiment

The latest sell-off in IT stocks has been largely driven by rising concerns of a recession in the United States. JPMorgan recently warned that the probability of a recession in 2025 has jumped to 60%. A downturn in the US economy could significantly affect discretionary spending, especially in sectors like technology and consulting, where Indian IT companies have a high exposure.

Kotak’s Bear Case: Stocks May Fall Further

Adding to investor concerns, Kotak Institutional Equities has outlined bear-case price targets for Indian IT companies. These projections suggest that some stocks could fall by as much as 35% from current levels if recession fears materialise into reality.

This conservative approach is echoed by JPMorgan, which recently advised investors to “keep IT positioning light,” suggesting that conservative earnings guidance may still drag prices lower before any sustainable recovery is seen.

What Lies Ahead for Indian IT?

The sharp correction in the Nifty IT index is a clear indicator of mounting investor anxiety. While the long-term fundamentals of many Indian IT companies remain intact, the sector’s close ties with the global economy—especially the US—mean it cannot escape the effects of macroeconomic shifts.

As investors await the March quarter earnings from major IT firms, market participants will be keenly analysing management commentary and guidance for FY26. Until then, volatility in the Indian IT space is likely to continue, with cautious investor sentiment keeping stocks under pressure.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.