Shares of information technology companies came under selling pressure on April 17, bogged down by the subdued Q4 earnings of two industry majors—Wipro and TCS, combined with their cautious management commentaries.
The unstable global macro backdrop, ripe with tariff uncertainty has cast dark clouds over the previously expected path of recovery for the IT sector, a sentiment hinted by managements of Wipro and TCS in their post-earnings calls.
Wipro noted that macroeconomic uncertainty driven by tariffs is dampening demand in sectors such as consumer goods and manufacturing. This has led to a pause in certain large-scale transformation projects and reduced discretionary spending by clients, the company said.
Meanwhile, TCS warned that clients in the retail, travel, and automobile sectors are increasingly exposed to the fallout from ongoing tariffs affecting us all.
On top of that, Wipro also guided for a decline in revenue for Q1 FY26, with IT services revenue expected to fall to between $2,505mn and $2,557mn, a sequential drop of 1.5% to 3.5% in constant currency terms.
In addition to the weak growth outlook, both the IT majors also sounded alarms of caution against wage hikes for FY26, hinting towards expectations of pressure persisting as the year unfolds.
Alongside company managements, brokerage houses have also voiced caution regarding the IT sector amid worsening global macroeconomic conditions. These headwinds have hindered the recovery that many major IT firms had hoped to achieve in FY26, especially as the demand environment had shown early signs of improvement over the past two quarters.
Domestic brokerage Choice Broking stated that the cautious global sentiment, reflected in Wipro’s Q1 FY26 guidance, may pose headwinds to the company's positive growth prospects in FY26.
"Wipro’s weak Q1FY26 guidance, driven by elevated levels of macro uncertainty due to tariffs, makes it difficult for it to report positive growth in FY26, thus derailing its turnaround thesis," Nuvama Institutional Equities added.
As for TCS, while caution still persists, analysts are drawing optimism from the company’s strong deal wins to help sail it through the macro uncertainty.
Meanwhile, the caution on behalf of analysts and managements also seeped across investors, who took on a risk averse approach towards the sector. This has resulted in a strong selloff in IT stocks in today’s session, dragging the Nifty IT index 1.4% lower in trade today.
While Wipro shares took the sharpest blow with an over 5% fall, others like Tech Mahindra, HCLTech, Infosys, LTIMindtree, and L&T Tech dropped 1-3%.
Another industry bellwether, Infosys is also slated to detail its Q4 numbers after market hours today where investor attention will once again be on what the management guides for the upcoming quarters.
