The rout in domestic tech stocks has extended into this week, with the Nifty IT index losing another 0.72%, extending its weekly losing streak to the fifth straight week, the largest weekly drop in little over two years.
The last time the index logged losses for five consecutive weeks was between February and March 2023. The index has lost 12.17% over the last five weeks, causing it to lose 20% in 2025 so far, making it the worst performer among major sectoral indices.
Eight out of ten constituents of the index are in bear market territory, trading with a drop of more than 20% from their recent peak. On Dalal Street, corrections are defined as losses of 10%, while bear markets are marked by drawdowns of 20% or more.
Oracle Financial Services has dropped 36.2% to ₹8,424 from its December peak of ₹13,220, and TCS shares have crashed 33.8% to ₹3,036, wiping out over ₹5 lakh crore of the company’s market capitalization.
Other tech majors such as Infosys, HCL Technologies, and Wipro are also trading with cuts of 29.07%, 26.66%, and 26.36%, respectively. In fact, all ten constituents of the index are now down over 15% from their recent record highs.
Macroeconomic challenges hit the IT stocks
Investors seem to be driving away from these once high-flying stocks as persistent macroeconomic pressures, delayed project ramp-ups, and subdued discretionary spending have led to concerns that would continue to weigh on demand in the upcoming quarters as well.
Over the last few quarters, clients of Indian IT services have been cutting their IT budgets due to economic uncertainty, especially in the US and Europe. Many large enterprises are prioritising cost optimisation, resulting in an increase in cost take-out deals, vendor consolidation, and a reduction in headcount costs, impacting the manufacturing and retail segments.
This delay has also impacted the company’s June-quarter performance, with the majority reporting single-digit top-line growth.
Tata Consultancy Services (TCS) missed quarterly revenue estimates as clients remained cautious about non-essential spending amid US tariff-related uncertainty. The tech bellwether is also planning to cut 2% of its workforce, or around 12,000 jobs, in the ongoing fiscal year.
HCL Tech reported a June-quarter profit below analyst estimates and lowered its operating margin forecast for FY2026. Infosys saw revenue rise 7.5% to ₹42,279 crore, while net profit increased 8.6% to ₹6,921 crore. Wipro’s topline grew marginally by 0.8%, but there was a sequential decline of 1.6%.
Additionally, the ongoing tariff tensions have also influenced the US Federal Reserve policy decisions as the central bank remains cautious, concerned that higher tariffs could hurt consumer pockets and push up inflation. This also led the policy makers to hold interest rates steady for the fifth consecutive meeting in July, despite repeated pressure from the White House to lower borrowing costs.
FPIs exit Indian IT stocks amid weak earnings and demand outlook
The lacklustre earnings and weak demand outlook have also spooked overseas sentiment as foreign investors offloaded $2.27 billion worth of Indian IT stocks in July, their highest sectoral exit since March 2022, data from the National Securities Depository shows.
In July 2025, FIIs were net sellers to the tune of $2.9 billion, turning net sellers after four consecutive months of being net buyers. Until 10th July, FPIs were net buyers, purchasing equities to the tune of approximately $0.4 billion. They then turned net sellers and offloaded Indian equities worth $3.2 billion over the rest of the month, with a high quantum of selling seen towards the end of July.
Following the IT sector, other sectors with significant outflows included BFSI (USD 671 million), Realty ($450 million), Auto ($ 412 million), Oil & Gas ($ 372 million), and Durables ($ 302 million).
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