Nifty IT drops 3% despite strong market; TCS, Infosys, HCLTech drag

The NIFTY IT index remained under stress on Friday, even as the broader market traded in positive territory, with all sectoral heavyweights slipping into the red, barring Wipro. The sell-off in IT stocks followed the March quarter earnings announcement by index bellwether Tata Consultancy Services (TCS) a day earlier.

The NIFTY IT index, which tracks the performance of India’s leading information technology companies, dropped as much as 3% intraday, emerging as the top sectoral loser despite a broader market rally. In contrast, the benchmark indices - Sensex and Nifty - were up around 1% each, led by gains in realty, banking, and financial stocks.

TCS, the most valued IT stock, declined 3% to ₹2,511.20 on the NSE, while Infosys fell 3.12% to ₹1,290.10. Among other large-cap peers, HCL Technologies dropped 2.29% to ₹1,431.30, Tech Mahindra slipped 2.05% to ₹1,431.60, and LTIMindtree lost 2.20% to ₹4,471.30.

Wipro was the only marginal gainer, rising 0.07%, bucking the broader trend.

In the mid-cap segment, Coforge emerged as the top loser, falling 3.64% to ₹1,218.80, while Mphasis declined 2.48% to ₹2,326.20 and Persistent Systems slipped 1.70% to ₹5,378.30. Oracle Financial Services Software (OFSS) saw a relatively smaller decline of 0.66% to ₹7,170.00.

What fuelled sell-off in IT stocks?

The primary reason for the decline in the IT index was the correction in sectoral heavyweights such as Infosys and TCS, which together carry significant weight in the index.

TCS shares witnessed sharp volatility during the session, as investors reacted to its earnings report. The Tata Group stock initially rose nearly 1% in early trade but later pared gains to fall as much as 3.3% from the day’s high.

The company’s Q4 earnings were largely in line with analysts’ estimates, supported by currency tailwinds that aided margins. For Q4 FY26, the IT services giant reported a 12% year-on-year (YoY) increase in consolidated net profit to ₹13,718 crore, while revenue from operations rose 10% YoY to ₹70,698 crore. On a sequential basis, profit jumped 29%, while revenue increased 5.4% quarter-on-quarter.

The board also recommended a final dividend of ₹31 per share, subject to shareholder approval. For FY26, total shareholder payout stood at ₹39,571 crore.

Brokerages remained largely bullish on TCS post results, with many reiterating a ‘Buy’ rating on the stock. Motilal Oswal Financial Services maintained a BUY rating with a target price of ₹3,000, while Emkay Global Financial Services and JM Financial retained an ADD rating, citing stable margins, strong cash flows, and a healthy order pipeline, with deal TCV at $40.7 billion for FY26.

Technical outlook

According to Kunal Kamble, the Nifty IT index continues to trade within a broader downtrend, forming a series of lower highs and lower lows, indicating sustained structural weakness. He noted that the recent bounce appears to be a relief rally, as prices approach the immediate resistance zone of 31,000–31,500, which aligns with a prior breakdown area and a falling trendline.

He further highlighted that the index remains below its 30-day exponential moving average (EMA), signalling a lack of bullish strength. Unless the index decisively breaks and sustains above 32,200, the current pullback is likely to face selling pressure. On the downside, immediate support is placed around 28,500, which could be retested in the near term.

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