IT Stocks Crash: 7 Shocking Reasons Why Top Tech Giants Like TCS & Infosys Are Losing Big!
Indian IT stocks faced a sharp downturn on April 4, 2025, following renewed global recession fears and a fresh wave of US tariffs announced by President Donald Trump. Leading tech firms including TCS, Infosys, Wipro, HCL Tech, and Tech Mahindra ended the day in the red, contributing to a 3.58% drop in the Nifty IT index. Coforge was among the worst hit, tumbling nearly 7%, followed by heavy losses in Mphasis, LTIMindtree, and Persistent Systems.
The broader market also reflected this weakness, with the Sensex plunging over 930 points and the Nifty 50 shedding nearly 346 points. Analysts now anticipate a weak close for FY25, citing prolonged deal cycles, cautious client spending, and changing AI pricing models. Brokerages such as HDFC Securities and Bernstein expressed mixed views, preferring companies with strong order books or margin resilience like TCS, Infosys, and Persistent Systems. The market rout wasn’t limited to IT, as pharma and metal stocks also suffered amid broader sell-offs. With global uncertainties mounting, investor sentiment remains fragile across sectors.
IT Stocks Crash: 7 Shocking Reasons Why Top Tech Giants Like TCS & Infosys Are Losing Big!
April 4, 2025, proved to be a turbulent day for India’s IT sector, with major companies like TCS, Infosys, Wipro, Tech Mahindra, and HCL Technologies witnessing sharp declines in their stock prices. The sell-off was triggered by growing anxieties over a potential global economic slowdown and unexpected tariff announcements by former U.S. President Donald Trump, reigniting fears of trade wars. The Nifty IT index, a key benchmark for the sector, plummeted nearly 4% to close at 33,511.40, marking a 20% year-to-date drop as investors grappled with weakening global demand and geopolitical risks.
Why the Panic?
The immediate catalyst for Friday’s crash was Trump’s announcement of “reciprocal tariffs” on imports, a move seen as retaliation against countries with existing trade barriers against the U.S. This decision amplified uncertainty for Indian IT firms, which derive a significant portion of their revenue from American clients. Companies like Coforge, LTI Mindtree, and Mphasis bore the brunt of the sell-off, with shares plunging between 3% and 7%. Coforge led the losers, nosediving nearly 7%, followed by Mphasis (-5.9%) and LTI Mindtree (-4.3%). Even industry giants TCS and Infosys weren’t spared, dropping 2.89% and 2.70%, respectively.
The broader market mirrored this gloom. The Sensex sank 930 points to 75,364.69, while the Nifty 50 tumbled 345 points to 22,904.45. Every sector except FMCG (consumer goods) ended in negative territory, reflecting widespread risk aversion.
Brokerages Split on Recovery Prospects
Analysts offered mixed views on the sector’s future. HDFC Securities recommended “ADD” ratings for TCS and HCL Tech, citing their strong fundamentals, but advised investors to “REDUCE” exposure to Wipro and Tech Mahindra due to weaker growth visibility. Bernstein, a global research firm, stood by Infosys, highlighting its resilience and potential to capitalize on a rebound in IT spending.
Elara Capital pointed to “valuation comfort” in stocks like TCS, Mphasis, and LTIMindtree, suggesting their current prices might offer buying opportunities. Mid-cap players like Coforge and Persistent Systems also remained on watchlists, thanks to robust deal pipelines. However, analysts cautioned that near-term pain could persist as clients delay spending decisions amid macroeconomic uncertainty.
Tariff Ripple Effect: Pharma and Metals Also Hit
The tariff shockwaves extended beyond IT. Pharma stocks, including Cipla, Dr. Reddy’s, and Biocon, crashed 6–7% after Trump hinted at imposing import duties on medicines. The Nifty Pharma index collapsed over 4%, its worst single-day performance in months. Metal stocks, too, faced pressure as investors feared retaliatory trade measures could disrupt global supply chains.
What’s Next for the IT Sector?
With the financial year ending in March 2025, companies are expected to issue cautious forecasts for FY26. Discretionary spending on IT services—such as cloud migration or software upgrades—is likely to remain subdued as businesses prioritize cost-cutting. Longer deal cycles and pricing pressures linked to AI adoption add to the challenges.
However, not all hope is lost. Analysts believe firms focusing on cost optimization and AI-driven efficiencies could emerge stronger. For instance, Infosys’ investments in automation and generative AI position it to deliver higher margins once demand revives. Similarly, TCS’s dominance in large-scale outsourcing deals provides a buffer against volatility.
Investor Sentiment Remains Fragile
The market’s nervousness underscores deeper concerns about global growth. Rising interest rates, sticky inflation, and geopolitical tensions have already slowed tech spending in the U.S. and Europe—key markets for Indian IT. Trump’s tariff threats have only added fuel to the fire, reminding investors of the 2018–2020 trade wars that disrupted global markets.
While some see the current slump as a buying opportunity, most advise caution. “Wait for clarity on demand recovery and tariff policies before jumping in,” warned a Mumbai-based fund manager. For now, the sector’s fate hinges on how quickly the U.S. and other economies stabilize—and whether trade tensions escalate further.
In summary, India’s IT sector faces a perfect storm of external headwinds. While strong fundamentals and AI advancements offer a silver lining, investors should brace for more volatility in the coming months.