Indian IT stocks drop 1.3% on weak demand and AI pressures
Indian IT stocks dropped 1.3%, making them the top sectoral loser against the benchmark Nifty 50's 0.2% decline. Analysts from CLSA and Goldman Sachs cited subdued near-term demand and a challenging outlook for FY27 due to weak macro conditions, higher rates, and inflation. Concerns about discretionary spending and earnings pressure, particularly for Infosys and Wipro, were highlighted. Goldman Sachs also noted pricing pressure from AI-led productivity gains, impacting revenue, although both firms acknowledged AI as a potential revenue opportunity with uncertain timing. The IT sector remains
2%. CLSA and Goldman Sachs said near-term demand remains subdued and flagged a challenging FY27 outlook. CLSA said weak macro conditions, higher rates and inflation continue to weigh on discretionary spending, creating downside risk to earnings, especially for Infosys and Wipro. It added that management commentary remains cautious, although HCLTech's demand trends appear the most resilient among large-cap peers.
Goldman Sachs said pricing is under pressure from AI-led productivity, which is affecting revenue. Both brokerages said AI also creates new revenue opportunities, but the timing remains uncertain, while near-term sector catalysts are scarce and global capability centres keep gaining share. IT stocks remain the worst year-to-date performer among major sectors, down about 25%, compared with a roughly 11% decline in the Nifty.