TCS, Infosys, Wipro, HCL Tech, TechM Crashed: Why IT Stocks Are Falling? Jefferies Downgrades 6 Tech Shares

Amidst tariffs tension and geopolitical risks, IT stocks are facing significant conundrum. One that is supposed to their golden star for future long-term growth, but is currently threatening a paradigm change in their own business mix. The AI disruption continues to be a nightmare for Indian tech stocks who are witnessing their fifth consecutive bearish day. On February 24, Nifty IT index nosedived by nearly 3%, extending its fall to nearly 20% in a month.

Large tech players like TCS, Wipro, HCL Technologies, Infosys, Tech Mahindra, LTIMindtree and more are dragging broader Indian market, pushing Sensex and Nifty to fall by nearly 1% each in the early session of Tuesday.

All IT stocks have crashed and recorded double-digit percentage decline in a month.

The latest fear is fuelled after global brokerage Jefferies downgraded its rating on six big players in India. As per Jefferies, AI may structurally change the IT business mix towards consulting/implementation while reducig managed services. This would not only increase cyclicality but also require a change in talent/operating model - hence adding risks.

IT Stocks On February 24:

At the time of writing, Nifty IT index plunged by nearly 3% to trade at 30,721.35, which is near the day's low of 30,721.35. All stocks are down, but Infosys is leading the downfall.

Infosys has plunged by 2.74%, emerging as the biggest loser for second consecutive day now. This is followed by HCL Tech which tumbled by 2.71%, followed by Persistent Systems who dropped by 2.35% and Tata Consultancy Services (TCS) who is the largest tech company of India. TCS has declined by 2.32%. While Mphasis has slipped by 2.26%, Tech Mahindra dropped by 2.06% and LTIM dipped by 2.05%.

Other stocks like Coforge and Wipro shed 1.94% and 1.73%. Meanwhile, Oracle Financial Services dived by nearly 1%.

Tech Stocks 1 Month Performance:

Due to the relentless selling pressure, IT stocks have nosedived steeply and corrected significantly. For instance, Nifty IT has recorded 20% decline in a month and is currently near its 52-week low of 30,918.95.

Here's how the stocks performed:

Just like Nifty IT index, mega tech stocks like TCS, Infosys, HCL Tech and Wipro are nearing their 52-week low. Among the worst performers in a month are - Coforge and Infosys who nosedived by nearly 23% each, followed by Persistent who fell by 21.2% and LTIM who dropped by nearly 20%. TCS has recorded nearly 18% decline, while Wipro is down by 15.44%. HCL Tech has plunged by nearly 19%.

Symbol	Current Price (Rs)	Change	% Change (1-Day)	52W H	52W L	30days %Chng
NIFTY IT	30,721.35	-829.15	-2.63%	40,301.40	30,918.95	-19.66%
OFSS	6,625.00	-44.5	-0.67%	9,950.00	6,400.00	-16.84%
WIPRO	202.33	-3.56	-1.73%	303.3	201.13	-15.44%
COFORGE	1,264.00	-25	-1.94%	1,994.00	1,194.01	-22.88%
LTIM	4,732.50	-99	-2.05%	6,429.50	3,802.00	-19.73%
TECHM	1,411.20	-29.7	-2.06%	1,854.00	1,209.40	-17.04%
MPHASIS	2,257.60	-52.2	-2.26%	3,037.20	2,044.55	-18.22%
TCS	2,614.30	-62	-2.32%	3,763.20	2,585.00	-17.66%
PERSISTENT	4,860.50	-117	-2.35%	6,599.00	4,148.95	-21.19%
HCLTECH	1,387.50	-38.7	-2.71%	1,780.10	1,302.75	-18.85%
INFY	1,291.10	-36.4	-2.74%	1,808.00	1,281.50	-22.94%

"The trend of weakness in tech stocks stemming from the potential AI impact continues. The weakness in the ADRs of Indian IT companies indicates that this segment will continue to remain under pressure," said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.

Jefferies Cut Ratings On 6 Stocks:

In its note, Jefferies said, "Our calculations suggest that at CMP, stocks are pricing in INR revenue CAGR of 6-14% for large IT firms and 9-17% CAGR for mid-sized IT firms over FY26-36 with terminal growth rates ranging from 4% (Wipro) to 7% (IKS). These growth rates are 6-12% lower than the growth rates in FY16-26E for Sagility, Hexaware and IKS, 3% lower than the growth rates in FY16-26E for TCS, Infosys, HCLTech, Coforge, but 1-2% higher vs. growth rates in FY16-26E for Wipro and TechM."

Nonetheless, Jefferies also believes that these IT stocks offer higher downside potential. Here are Jefferies recommendations on six stocks:

Infosys: Jefferies downgraded its rating to HOLD from earlier BUY, while target price is reduced to Rs 1,290 from Rs 1,880.

HCL Technologies: The brokerage also trimmed its rating to HOLD on HCL from BUY. The target price is chalk down significantly to Rs 1,390 from Rs 1,885.

Mphasis: Similarly, the rating is lowered to HOLD on Mphasis from BUY, while Jefferies reduced target to Rs 2,450 from earlier Rs 3,410.

LTIMindtree: This L&T stock's rating has been reduced to 'Underperform' and target price is lowered to Rs 4,300 from previous Rs 6,175.

TCS: India's tech leader, TCS is also in the list. The company's rating is lowered to 'Underperform'. The target price is cut to Rs 2,350 from earlier Rs 3,485.

Hexaware Tech: The stock's rating is lowered to underperform and target price is reduced to Rs 460 from earlier Rs 660.

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