Why Are IT Stocks Falling on April 09? 4 Key Reasons Behind the Market Selloff

Indian IT stocks are facing a sharp decline, with the Nifty IT index falling over 3% today. This continues a broader downtrend, as the index has dropped nearly 11% in the last 7 trading sessions, losing about 3,800 points. Over the past month, it is down 14%, and in 3 months, it has crashed by 25%. 

Once considered a stable investment, IT stocks are now among the worst performers in the market. Let’s explore the key reasons behind this fall and identify the biggest losers in the sector. 

Top IT Stocks Dragging the Market Down 

Most major IT stocks are in the red today. Wipro has taken the biggest hit, falling 4.5%, followed by MphasiS, Persistent Systems, and Tech Mahindra, each losing over 3%. LTIMindtree, Infosys, Oracle Financial Services, and HCL Tech have declined around 2%, while TCS is down 1.5%. 

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4 Reasons Why IT Stocks Are Falling 

1. Weak Global Tech Sentiment

Indian IT stocks often follow the performance of the US-based NASDAQ index, which houses global tech giants like Apple, Amazon, and Microsoft. NASDAQ futures have dropped 2%, signalling weak investor confidence in the tech sector. Since a major portion of Indian IT revenue comes from the US, any downturn in NASDAQ impacts Indian tech firms as well. 

2. US Recession Fears

The US is the largest market for Indian IT services. Concerns over a possible economic slowdown, driven by high inflation and new trade policies under the Trump administration, have created uncertainty. Analysts warn that if inflation rises, businesses may cut IT spending, affecting Indian outsourcing firms. 

3. Weak Q4 Earnings Outlook

Indian IT companies are struggling to boost their profits. With lower attrition rates, high employee utilisation, and pressure on pricing, firms are finding it difficult to improve margins. Analysts expect Infosys to forecast revenue growth of just 1-3% for FY26, similar to its performance in FY25. 

4. High Valuations and Risk of Further Decline

If a US recession occurs, Indian IT stocks could fall. Even without new trade restrictions, stock valuations remain under pressure. 

According to analysts, TCS, Infosys, HCL Tech, and Coforge have relatively lower downside risks but are still vulnerable. Tech Mahindra, Coforge, LTIMindtree, and Infosys could face the steepest declines due to their exposure to discretionary spending and manufacturing clients. Additionally, companies with weaker leadership stability may struggle more during an economic slowdown. 

Coforge and LTIMindtree have already seen a sharp fall in their stock prices. 

Conclusion 

The ongoing selloff in IT stocks reflects global economic uncertainties and weak earnings prospects. While some stocks may have limited downside, the overall sector remains vulnerable to further declines. Investors should stay cautious, focusing on companies with strong fundamentals and stable leadership. 

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.