Last Updated:March 28, 2025, 13:18 IST

Indian IT stocks like Tata Consultancy Services (TCS), HCL Technologies, and Infosys declined up to 2%; What investors should know

Indian IT stocks fell on Friday, with major players like Tata Consultancy Services (TCS), HCL Technologies, and Infosys declining up to 2%, as investors weighed the impact of new US tariffs ahead of a crucial US inflation report.

Shares of Wipro, Infosys, LTIMindtree, TCS, and HCL Technologies dropped between 1.1% and 2%, while Tech Mahindra, Persistent Systems, and Mphasis lost between 0.5% and 1%. The Nifty IT index was down 1.3%, mirroring overnight losses on Wall Street and broader weakness in Asian markets, where stocks in Japan and South Korea faced heavy selling. The downturn followed US President Donald Trump’s announcement of a 25% tariff on auto imports, set to take effect next week, sparking concerns over escalating trade tensions.

Investors are also awaiting the US Federal Reserve’s preferred inflation gauge—the Personal Consumption Expenditures (PCE) Price Index—expected later today, which could offer insights into future U.S. interest rate movements.

Market Resilience Amid Uncertainty

Despite global volatility, foreign institutional investors (FIIs) remain optimistic about Indian equities. On Thursday, FPIs purchased Indian shares worth Rs 11,111 crore, marking their largest single-day buying in six months and extending a six-session buying streak.

“The market’s resilience, despite tariff threats, is driven by FII inflows and growing investor confidence,” said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments. “However, in times of uncertainty, investors should remain patient and wait for stability. Large-cap stocks with strong fundamentals are likely to stay resilient.”

Investor Outlook: What’s Next For IT Stocks?

According to global brokerage UBS, while uncertainty has risen, its discussions with IT management teams suggest only a marginal impact on client spending. UBS anticipates a 5-7% consensus earnings downgrade but expects a stronger FY26, implying a sectoral rebound.

The brokerage also predicts IT stock valuations will recover to their average FY25 levels in the near term, forecasting a 5-10% rebound for the sector. Additionally, potential US Federal Reserve rate cuts and corporate tax reductions could support tech spending, helping mitigate concerns about a US economic slowdown.

Currently, the Nifty IT index trades at a 5% discount to its five-year rolling average. TCS is valued 1.1 standard deviations below its five-year average, while Infosys is trading 0.6 standard deviations lower.

UBS remains bullish on select IT stocks, maintaining a ‘Buy’ rating on:

• TCS (Target Price: Rs 4,250)

• Infosys (Target Price: Rs 2,100)

• Wipro (Target Price: Rs 315)

• HCL Technologies (Target Price: Rs 2,030)

However, UBS has assigned a ‘Sell’ rating on Tech Mahindra, with a price target of Rs 1,470.

With the Reserve Bank of India’s monetary policy decision on April 9 and corporate earnings season approaching, investors are closely watching global developments and their impact on India’s export-driven IT sector.