Nifty IT Crashes 11% in September: TCS, Infosys, Wipro Among Top Losers

The Quick Take

• The Nifty IT index fell 11% in September, with TCS, Infosys, and Wipro among the biggest losers, as high interest rates, global growth fears, and generative AI pressure weighed on technology spending.
• Investor attention now turns to Q2 FY27 earnings — due from October — as the pivotal event to determine whether the sector can justify a recovery.
• The September decline deepens an already challenging year for Indian IT, which faces uncertainty on both the demand side (client budgets) and supply side (AI automation of software work).

The Nifty IT index's 11% September decline places it among the worst-performing large-cap sectors in the Indian market this year. The selloff is driven by a convergence of structural concerns: US and European enterprise clients are reviewing discretionary IT budgets in the face of high interest rates, making large multi-year transformation deals harder to close. Simultaneously, the rapid advancement of generative AI coding tools has revived the debate about whether AI will reduce the labour intensity of software development — the core service that Indian IT majors provide.

TCS, Infosys, and Wipro — the three largest Nifty IT components — have each underperformed for different reasons but share common headwinds. TCS faces banking sector client caution in the UK and Europe; Infosys has been navigating deal ramp-ups that have been slower than guided; Wipro's CEO transition added management uncertainty. The September correction has brought valuations to levels not seen since 2022, but the consensus view is that Q2 earnings guidance will be the true test of whether these are now cheap or just cheaper.

The October earnings season will be the critical inflection point. Investors are watching for: (1) whether deal total contract value (TCV) signings show any improvement in pipeline conversion, (2) guidance on discretionary spend recovery from US financial services clients, and (3) management commentary on AI tools adoption and its impact on headcount planning. A positive earnings response could trigger a technical recovery in the Nifty IT index; a repeat of cautious guidance would likely extend the September decline further into Q3.

Synthesized from 1 source.