New Delhi: India’s top Information Technology (IT) companies like Tata Consultancy Services (TCS), Infosys, Wipro, and HCL Technologies are experiencing a prolonged downturn in the stock market. This decline is occurring even as the broader market is seeing a resurgence. As of April, the Nifty IT Index has dropped by 9.5%, while the Nifty 50 has seen a modest 1.4% increase.
The IT Sector Struggles Amid Market Rebound
Despite a 1.8% surge in Nifty 50 on Thursday, the Nifty IT Index barely moved, rising just 0.23%. This poor performance has resulted in the IT sector’s weightage in the Nifty 50 index falling to a 17-year low of just 10.2%, almost matching the record low of 9.7% observed in March 2008 during the global financial crisis.
In the span of just two years, the weightage of the IT sector in Nifty 50 has plummeted by 42% from 17.7% in March 2022. This sharp decline has wiped out almost all the gains that the sector had amassed during the COVID-19 pandemic and in the past two decades when it had outperformed the broader market.
Market Cap and IT Sector’s Current Status
As of now, the total market capitalization of the five IT companies in Nifty 50 has dropped to ₹25.5 lakh crore, while the entire Nifty 50’s market cap stands at ₹189.4 lakh crore. This significant drop highlights the increasing challenges faced by India’s IT sector.
The Nifty IT Index has seen a staggering 23% drop in 2025 so far, marking the worst start to a year in two decades. This is even worse than the 18.3% decline recorded in 2022 during the first four months, which indicates that the current downturn is deeper and more prolonged.
The IT Sector’s Weightage in Nifty: A Historical Perspective
Historically, the IT sector has maintained an average share of about 13.8% in the Nifty 50 since 2001. However, this share has been shrinking as the sector struggles to maintain its growth momentum. The current trend is reminiscent of the 2008 global financial crisis when IT stocks underperformed significantly, raising concerns about the sector’s long-term prospects.
Expert Opinions on the Current Downturn
Experts suggest that the weak earnings forecasts for the Q4 FY25 and FY26 are contributing to growing investor anxiety. According to Chokkalingam G, the founder of Economics Research, “Earlier, IT companies were growing their revenues by 2-4% annually in USD terms. However, there is now an expectation of stagnation or even a decline in FY26. The recent reports of TCS and Infosys showing flat revenues and declining profits have further exacerbated investor concerns.”
The US Market’s Impact on India’s IT Sector
Additionally, the possibility of new tariffs imposed by US President Donald Trump is casting a shadow over India’s IT sector. The US market remains the largest source of revenue for India’s IT giants, and any trade disruptions could further deteriorate their financial performance.
A report by HSBC Global Research indicates, “The state of the IT companies is deeply intertwined with the US macroeconomic outlook. We had previously recommended companies dependent on the US market for their long-term outlook. However, the US economic situation has now become extremely uncertain in just three months.”
The Future Outlook: Will IT Stocks Continue to Lag Behind?
If the current trends persist, it’s likely that the IT sector will continue to lag behind the Nifty benchmark for the fourth consecutive year, marking a prolonged bearish phase for the industry. This extended downturn could signal a challenging period for India’s IT sector, potentially leading to long-term stagnation unless a significant recovery occurs.
Conclusion: The Road Ahead for India’s IT Giants
The IT sector’s woes come at a time when India’s economy is undergoing structural changes and adapting to global challenges. With a sharp decline in IT stock performance and deteriorating growth forecasts, these companies will need to recalibrate their strategies to regain investor confidence.
As global economic conditions remain volatile, particularly with the uncertainty surrounding the US market, it’s critical for India’s IT companies to adapt and diversify their revenue streams. Until then, the Nifty IT Index will likely continue to struggle, and investors will remain cautious about placing large bets on this sector.
Key Takeaways:
The Nifty IT Index has witnessed a 9.5% decline in April, far behind the broader market.
The weightage of the IT sector in Nifty 50 is at a 17-year low of 10.2%.
Expert forecasts indicate stagnation or decline in revenue for major IT firms in the coming quarters.
The US market’s instability could further impact India’s IT giants, which rely heavily on US-based clients.
