India IT Stocks Shed $115 Bn in Four Months as Earnings Disappoint

India's top software exporters have added to investor worries with a string of disappointing quarterly results, raising fears that the ongoing slide in their stock prices may not yet be over.

Infosys, the country's second-largest IT outsourcer, forecast annual revenue growth below analyst expectations on April 23. The announcement came just two days after smaller rival HCL Tech reported a profit miss, triggering at least six analyst downgrades on the stock, Bloomberg reported. A broader index tracking the sector fell more than 5% the next day, closing at its lowest level since June 2023, according to the report.

The selloff has gathered pace since Tata Consultancy Services kicked off the earnings season on April 9. Nearly $115 billion has been wiped off the sector's market value over the past four months, a significant blow to India's broader market, given that technology stocks account for roughly 10% of the benchmark NSE Nifty 50 Index.

A Two-Front Challenge

India's $315 billion technology industry is grappling with two overlapping pressures. A weak global macroeconomic environment, further strained by the ongoing West Asia war, has led corporations to scale back discretionary spending on technology. At the same time, the rapid rise of AI is raising fundamental questions about the long-term relevance of traditional IT outsourcing models.

Companies are responding in different ways. Infosys has been embedding AI into its service offerings, hoping to reduce costs and persuade clients to maintain or grow their IT budgets. TCS, the sector's largest player, has partnered with OpenAI to build AI data centres in India and is reportedly close to similar deals with other global technology firms.

Sector Valuations at Multi-Year Lows

The NSE Nifty IT Index is now down nearly 25% in 2026, making it the worst-performing sectoral index in India and trailing the broader Nifty 50 for a second consecutive year.

The sector is trading at less than 17 times its one-year forward earnings, a steep fall from around 30 times at the start of last year. The Nifty 50, by comparison, trades at over 18 times. Infosys shares alone are down 22% this year.

What Analysts Are Saying

Last week, brokerage firm Motilal Oswal, in its quarterly guidance note for the technology sector, described the situation as "one battle after the other." It said Q4 results were unlikely to spring major surprises, but flagged that both the geopolitical and AI risks were difficult to fully assess at this stage, since available data is largely backward-looking.

"If the war persists, demand is likely to be affected, whereas AI deflation is more a question of what AI will be capable of in the next two to five years, rather than the last quarter," the brokerage said.

Motilal Oswal projected quarter-on-quarter constant currency growth of between -1% and 1.5% for large-cap IT firms, with mid-caps expected to fare slightly better in the range of -0.5% to 3.5%. For the full quarter, it estimated aggregate revenue growth of 11.3% year-on-year for its coverage universe, with EBIT and net profit growth of 12.9% and 10.8% respectively.

The brokerage also noted that rupee depreciation has offered some margin relief to exporters, partially cushioning the impact of slowing revenue growth.

Beyond near-term earnings, the bigger concern for investors is how quickly and effectively India's IT firms can adapt to an AI-driven world. Generative AI platforms, including models from Anthropic's Claude and Palantir, are seen as potential disruptors to traditional software and IT service delivery models, adding to the uncertainty around long-term demand.