After facing selling pressure last week, shares of information technology companies staged a rebound on April 21, with names like HCLTech, Infosys, Tech Mahindra, LTIMindtree and Mphasis clocking in 2-5% gains.
What’s more surprising is that the rally across these counters was seen even as industry leader Infosys rolled out a rather cautious outlook for the coming quarters. More than that, three IT majors—Infosys, TCS and Wipro, have released weak Q4 numbers while sounding alarms for the times ahead as global macroeconomic conditions remain under stress.
Adding to that, another headwind was in action for the IT sector today as the dollar index stood at a risk of a falling below the 98-mark. A weaker dollar harms margins for IT companies.
However, going against the slew of negatives at play, the sector still managed to grab investor optimism and surge in trade.
Where’s the catch?
The buying across IT names were more likely a result of bargain buying from lower prices after the recent correction, rather than a concrete trend reversal. In addition, analysts also liked the fact that despite tough conditions, the management of Infosys still rolled out a guidance for FY26 revenue growth whilst most believed that it would not.
Moreover, most experts on the Street believe that the recent pressure across IT stocks suggests that near-term challenges are largely priced in. While this doesn't necessarily indicate an immediate trend reversal, analysts expect a time correction, meaning stock prices are likely to remain rangebound in the coming months.
Some, like Vinod Nair, head of research at Geojit Financial Services also see the sector as a contrarian bet, due to its attractive valuation with an expectation of seeing improvements in the second half of FY26.
The Road Ahead
With uncertainty hanging over the fate of Trump’s tariff plans, a sliding dollar and a raging US-China Trade War, the path ahead for IT companies looks rocky. Fears of a US recession have weakened demand from US outsourcing giants, that have begun taking a cautious stance on discretionary IT spending, a major risk for domestic IT players.
Weighed down by the faltering growth outlook, the sector has also faced the wrath of selling by foreign institutional investors (FIIs) that have sold a whopping Rs 13,828 crore worth of IT stocks in the first half April. That also makes it the highest selloff among any sector by FIIs.
Looking ahead, the sector will also remain in focus through the week as Q4 earnings of two major players—HCLTech and Tech Mahindra are slated for a release in the coming days.
All three IT companies that have released their earnings thus far have sounded cautious, putting investors on edge. The unstable global macro environment, clouded by tariff uncertainties, has cast a shadow over the IT sector’s anticipated recovery—a concern echoed by Infosys, Wipro and TCS during their post-earnings calls.
Wipro highlighted that tariff-driven macroeconomic uncertainty is weighing on demand in sectors like consumer goods and manufacturing, causing delays in large-scale transformation projects and a pullback in discretionary spending.
Meanwhile, TCS cautioned that clients in retail, travel, and automobile sectors are increasingly vulnerable to the ripple effects of ongoing global tariffs, which continue to disrupt sentiment and spending patterns.
Taking it further, Infosys stated that the macro volatility has resulted in increased client caution and elongated decision-making cycles for discretionary projects.
