The tech stocks are battered even as the street readies for major Q4 earnings next week. The Nifty IT Index is down nearly 3%. This is after the sharp 4% cut seen yesterday- April 3. Coforge, Wipro, Persistent and Infosys are among the top losers and the Nifty IT Index is now down nearly 7% in last 30 days. International brokerage house Bernstein is now Underweight IT. Even locally, ICICI Prudential maintains underweight rating on IT.
The slide in the tech stocks is in sync with the trend seen across global markets. There was mayhem across Wall Street and markets saw the biggest singe-day decline since Covid.
Three reasons why tech stocks are falling today
Here is a quickly look at the key worries at the moment-
1. Wall Street sees biggest 1-day decline since 2020
Tech stocks across Wall Street saw their worst day ever since Covid. They saw severe selling pressure after US President Donald Trump’s tariff announcement sparked widespread fear. Apple was one of the top losers amongst the ‘Magnificient 7’, dropping as much as 9% in a single day. Amazon, Nvidia also saw similar losses. The tech heavy Nasdaq and the broader S&P 500 closed down 5% each.
2. Recession fears in US
As more clarity emerges on the US Tariff and its implications, there is a growing fear of recession and inflation engulfing the US economy. According to Bernstein, the tariffs can have significant “inflationary impact on the US, leading to depressed demand and increased chances of a recession there.” Many others like former RBI Governor, Raghuram Rajan have called the tariffs as “self goal” for US.
3. Weak Q4 earnings expectation
That apart locally too, Q4 is expected to be a weak quarter for most IT companies. According to Elara Securities, “there has been no meaningful recovery in the macro environment, especially in the US market, which should weigh on FY26 performance.” According to them, “IT players are running out of levers for margin expansion given already low attrition and high utilization. Pricing strain does exist in new deals, which may cap meaningful margin expansion in FY26 our view. We prefer TCS, MPHL and LTIM on valuation comfort.” They expect Infosys “to guide for a conservative 1-3% revenue growth in FY26 (similar to FY25 guidance). HCL Tech may guide for 3-5% revenue growth in FY26.