Bloodbath in IT stocks: HCL Tech, Tech Mahindra, TCS Fell up to 15% in July; Nifty IT Index Dropped Over 9%

Indian IT stocks saw a sharp reversal in July. This downturn was triggered by several factors, including below-expectation earnings, a cautious global outlook on trade, and restructuring signals from major IT firms. 

The sell-off was broad-based, impacting both large-cap and mid-cap companies and culminating in the steepest monthly decline for the Nifty IT index this year.

Nifty IT Index Logs Over 9% Decline in July 

The Nifty IT index ended July with a 9.4% loss, marking its largest monthly decline since February 2025 and the second-largest fall this year. All 10 constituents of the index registered negative returns. Four companies recorded double-digit losses, reflecting the widespread investor caution in the sector.

HCL Technologies led the fall, dropping 15.4% in value. Persistent Systems followed closely with a decline of 14.7%. Tech Mahindra share price also fell steeply by 13.2%, while TCS share price was down 12.3%. Wipro and Infosys were also impacted, losing 5.8% and 6.6%, respectively. Only Mphasis and LTIMindtree showed relatively modest losses by the end of the month.

Major IT Players Like TCS, HCL Tech Delivered Muted Performance 

Top Indian IT firms delivered muted financial performance in the first quarter of FY2026. Revenue growth for most companies remained in the single digits, a stark contrast to previous quarters of robust expansion.

Tata Consultancy Services (TCS), the sector bellwether, missed revenue expectations as clients curbed discretionary spending. This restraint was largely attributed to uncertainty around U.S. tariffs. The company also announced a workforce reduction of 2%, translating to around 12,000 job cuts during FY2026.

HCLTech reported uninspiring profits and revised its operating margin forecast downward for the rest of the financial year. Infosys recorded a 7.5% rise in revenue, reaching ₹42,279 crore, while its net profit increased by 8.6% to ₹6,921 crore. Meanwhile, Wipro posted marginal top-line growth of 0.8% and a sequential revenue dip of 1.6%.

Read More: Why TCS, Infosys, and Wipro Are Cutting Jobs Despite Revenue Growth?

Global Trade Tensions Impact 

Rising global trade tensions, particularly around the introduction of new tariffs by the United States, have contributed to a more cautious approach from both clients and investors. These developments have also influenced monetary policy decisions.

The U.S. Federal Reserve chose to keep interest rates unchanged for the 5th consecutive meeting in July. The central bank remains wary of the inflationary pressures that higher tariffs could generate, which may dampen consumer sentiment and economic growth. This policy stance has created an environment of uncertainty, further weighing on the performance of Indian IT exporters.

Conclusion 

Alongside earnings disappointments, announcements related to cost optimisation and restructuring have raised questions about the near-term growth prospects of Indian IT companies. Job cuts and margin forecast revisions signal that companies are bracing for a potentially challenging period ahead.

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