Nifty IT Cracks 11% in September; Infosys, Wipro and Tata Elxsi Trade at 52-Week Lows

IT stocks face renewed selling pressure ahead of Q2FY27 results as global macro uncertainty, cautious enterprise spending and AI disruption weigh on sentiment

Indian information technology stocks remained under pressure on Tuesday, with several major and mid-sized IT companies touching fresh 52-week lows as investors turned cautious ahead of the September 2026 quarter earnings season.

The Nifty IT index fell around 11 per cent during September, significantly underperforming the broader Nifty 50, which declined about 6 per cent over the same period, according to market data cited in the latest trading session. The sector has also remained among the weaker pockets of the Indian equity market during 2026.

Infosys, Wipro, Tata Elxsi and KPIT Technologies were among the companies touching their respective 52-week lows during Tuesday's intraday trade. Birlasoft, Aurionpro Solutions and Happiest Minds Technologies also recorded fresh yearly lows.

Nifty IT Underperforms the Broader Market

At around 12:51 PM on September 29, the Nifty IT index was down 0.83 per cent at 27,854.40, compared with a 0.48 per cent decline in the Nifty 50.

The IT index has experienced considerable volatility during 2026. Moneycontrol data showed the Nifty IT's 52-week range at approximately 25,699 to 40,301, highlighting the extent of the correction from its yearly peak.

The weakness has not been confined to one or two companies. Large-cap names including Tata Consultancy Services (TCS), HCL Technologies, Mphasis, Oracle Financial Services Software, Persistent Systems and Tech Mahindra were also trading lower during Tuesday's session.

The broad-based nature of the decline suggests that investors are reassessing expectations for the sector rather than simply reacting to company-specific developments.

Infosys, Wipro and Tata Elxsi Among Stocks at 52-Week Lows

Infosys was trading at around ₹986.20 during the afternoon session, after touching an intraday low of ₹980.40. Its 52-week high stands at ₹1,728, according to the market data available on Tuesday.

Wipro has also faced sustained pressure. The company was among the Nifty 50 stocks that touched a 52-week low during Monday's trading session, highlighting the weakness extending across India's large IT-services companies.

Tata Elxsi has experienced an even sharper correction from its yearly high. Business Standard market data showed a 52-week high of ₹5,949.95 and a 52-week low of ₹3,144.75, with the low recorded on September 25.

The sell-off has also spread into mid-cap technology companies, indicating that investors are becoming more selective across the IT ecosystem.

Global Growth Concerns Weigh on Technology Spending

One of the major concerns for Indian IT companies is the spending environment in their key overseas markets.

Indian IT-services companies derive a substantial portion of their revenues from North America and Europe. Any slowdown in corporate investment, particularly in discretionary technology projects, can affect new deal activity and revenue growth.

Brokerage analysis cited in the supplied report points to slower global growth expectations and elevated interest rates as factors prompting corporate clients to scrutinise technology budgets more closely.

Higher borrowing costs can make companies more cautious about large transformation projects, while uncertain economic conditions may encourage enterprises to prioritise cost reduction and projects with a more visible return on investment.

This environment can particularly affect discretionary consulting, transformation and implementation work.

AI Creates Both Opportunity and Near-Term Disruption

Generative artificial intelligence has added another layer of uncertainty for the traditional IT-services business model.

AI is expected to create significant demand for cloud infrastructure, data platforms, cybersecurity, AI implementation and enterprise transformation. At the same time, automation of routine coding, testing, software maintenance and some data-engineering tasks could reduce the amount of human effort required for certain technology projects.

This creates a transition period for IT companies.

Traditional effort-based billing models may come under pressure if customers can achieve the same output with fewer billable hours. At the same time, companies that successfully move towards AI-led services could potentially create new revenue streams.

The result is a mixed near-term picture: AI can increase the addressable market while simultaneously changing how technology services are delivered and priced.

Q2FY27 Earnings Become the Next Major Trigger

With the September quarter earnings season approaching, investors are likely to focus closely on revenue growth, deal wins, large-deal pipelines, margins, employee utilisation and management commentary.

The key question will be whether the sector can show an improvement in growth after a prolonged period of subdued technology spending.

JM Financial Institutional Securities, in its September 26 sector report cited by Business Standard, expected Q2FY27 constant-currency sequential growth for large IT companies to remain relatively modest, ranging from a decline of 0.5 per cent to growth of 2.6 per cent. The brokerage also pointed to continued macro uncertainty, AI-led productivity changes and competitive intensity.

The quarterly numbers could therefore become important in determining whether the current weakness is primarily valuation-driven or reflects a more prolonged slowdown in underlying demand.

Sector Had Shown Some Recovery Before September

The September decline follows a period in which the IT index had shown some improvement.

According to the report, the Nifty IT index had gained about 3 per cent over the preceding three months. Analysts attributed that recovery partly to Q1 results coming in broadly in line with expectations and easing concerns about immediate AI-led disruption.

However, that recovery has since been challenged by renewed macroeconomic concerns.

Moneycontrol reported earlier in September that rising crude prices and expectations of higher US interest rates were weighing on IT stocks. Higher US rates can affect economic growth expectations and therefore corporate technology spending, particularly for companies exposed to the US market.

Valuations Have Corrected, But Earnings Visibility Remains Key

The sharp correction has brought valuations down from their earlier levels. JM Financial estimated that the NSE IT index was trading at around 16 times one-year forward consensus earnings as of its September 26 report.

However, lower valuations do not automatically remove the earnings risk.

Investors will still need to assess whether revenue growth can accelerate, whether margins can remain resilient and whether AI-related investments will translate into incremental revenue quickly enough to offset pressure on traditional services.

For large IT companies, deal bookings and total contract value are likely to remain important indicators of future revenue visibility.

Large-Cap IT Faces Different Challenges

The correction across the sector does not necessarily mean that all companies face identical operating conditions.

Large IT companies such as TCS and Infosys have greater scale, diversified client bases and broad service portfolios. Mid-cap companies can have stronger exposure to specific verticals or technology niches, which can result in greater earnings sensitivity.

Companies with exposure to cloud transformation, cybersecurity, artificial intelligence, data engineering and digital engineering could see demand from enterprises seeking to modernise technology infrastructure.

At the same time, companies heavily dependent on traditional application maintenance or discretionary technology spending could face a different demand environment.

This divergence could make stock selection increasingly dependent on earnings visibility rather than simply sector-wide trends.

What Investors Will Watch in the Coming Weeks

The upcoming earnings season is expected to bring attention to several parameters:

Constant-currency revenue growth
Large-deal wins and pipeline strength
US and European technology spending
Operating margins and utilisation
Hiring and attrition trends
Generative AI revenue contribution
AI-related productivity benefits
Pricing pressure and competitive intensity
Management commentary on FY27 demand
Currency movements and their impact on reported earnings

The commentary around artificial intelligence could be particularly important. Investors will look for evidence that companies are converting AI demand into revenue rather than merely increasing AI-related investment.

IT Correction Reflects Both Cyclical and Structural Factors

The current weakness in IT stocks appears to reflect a combination of cyclical and structural factors.

On the cyclical side, global growth uncertainty, interest-rate expectations, crude prices and cautious corporate spending are affecting sentiment. On the structural side, generative AI is changing the economics of software development and technology services.

The transition could ultimately create opportunities for companies that successfully reposition themselves, but the near-term path may remain uneven as enterprises experiment with AI and reassess their technology budgets.

The sector's recent correction therefore needs to be viewed alongside actual earnings trends rather than price movements alone.

Market Outlook

The Nifty IT index's roughly 11 per cent September decline has placed the sector under significant pressure relative to the broader market. Several companies touching 52-week lows has also increased investor focus on earnings visibility and valuation support.

The immediate market trigger will be the Q2FY27 earnings season. Revenue growth, deal wins, margins and management commentary on technology spending will be closely watched to determine whether the recent correction is followed by stabilisation or further earnings-related pressure.

For the broader IT sector, the key themes remain global technology spending, US economic conditions, interest rates, currency movements and the pace at which artificial intelligence reshapes traditional service models. The combination of compressed valuations and uncertain growth makes upcoming quarterly results particularly important for the sector's near-term market direction.

Investors may therefore focus increasingly on company-specific earnings visibility, balance-sheet strength, client diversification and the ability to participate in AI-led technology spending rather than treating the IT sector as a single uniform trade.