Domestic tech stocks have emerged as the worst performers in 2025 so far, with persistent selling across the board leading to a sharp erosion in value and pushing them to multi-month lows. Lackluster earnings, tariff concerns, and a weak demand outlook have dampened investor sentiment toward the sector, triggering a rapid exodus from these stocks.
As a result, the Nifty IT index has crashed 20% year to date. If the pressure on tech stocks persists through the end of the year, it would mark the index’s first annual decline since 2022. Moreover, a loss of over 26% in value would make it the steepest yearly drop since 2008.
Among its constituents, seven out of ten are in bear market territory, trading more than 20% below their recent peaks. Oracle Financial Services has plunged 35% to ₹8,594 from its December peak of ₹13,220, while TCS shares have slumped 33.8% from their August highs to ₹3,036, erasing over ₹5 lakh crore from the company’s market capitalization.
Other tech majors such as Infosys, HCL Technologies, and Wipro have fallen 29%, 25.5%, and 25.4%, respectively. In fact, 7 out of ten constituents of the index are now down more than 20% from their recent record highs.
FIIs trim holdings in nine of 10 index stocks in Q1
Foreign institutional investors (FIIs) reduced their stakes in nine of the 10 Nifty IT index constituents amid weak demand concerns. In TCS, FII holdings fell to 11.5% from 12% in the March quarter, while Infosys saw a decline to 31.9% from 32.9%.
HCL Technologies FIIs shareholding dropped sharply to 18.6% from 19.2%, LTIMindtree fell to 6.6%, Coforge slipped to 37.4% from 40.2%, and MphasiS declined to 19% from 20.6%.
Wipro and Oracle Financial Services Software registered marginal drops of 100 basis points each, to 8.2% and 8.6%, respectively, while Persistent Systems FIIs holdings eased to 24.2% from 24.4%. Tech Mahindra was the only exception, with overseas holdings rising slightly to 23.3% from 23%.
Tariff pressure is likely to weigh on new deals
The demand outlook for India’s $283-billion IT sector remains uncertain due to US tariff risks and broader geopolitical factors. Indian tech giants started the year with high hopes for pro-growth policies from the Trump administration.
However, a series of tariff-related announcements soon dampened investor sentiment, raising fears that a potential US economic slowdown triggered by trade wars could lead to fewer IT deals.
The slowdown in new deals has already fed into companies’ performance in the June quarter, with the country’s top tech firms posting muted results, reporting a single-digit top-line growth ranging from 0.8% to 8.1%.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
