Nifty IT falls 4%; Infosys, TCS, Coforge drop up to 5%: Why

Guidance reset puts India’s IT rally under pressure

Infosys’ weaker sales outlook has revived concerns about demand, pricing and how quickly AI-related productivity gains could affect traditional IT services.

Infosys’ lower forecast resets the sector’s growth debate

The Nifty IT index slipped 4% to 30,928.10 on the NSE in Wednesday’s intraday deals. At 11:07 a.m., it was down 3.4% at 31,110.45, making it the weakest sectoral index at that point; the Nifty 50 was lower by 0.62%. Infosys, Mphasis and Coforge fell between 5% and 6%, while TCS, Tech Mahindra, HCL Technologies, Persistent Systems and LTM declined 3% to 4%.

The immediate trigger was Infosys’ decision to reduce its FY27 revenue growth guidance to 1%–2% in constant currency, from 1.5%–3.5% earlier. The revised range reflects a weaker-than-expected first half and a more cautious view of the rest of the year. On an organic basis, after accounting for a 1.7% inorganic contribution, the company’s growth outlook is -0.7% to 0.3% year on year in constant currency.

Analysts cited weaker volumes, pricing increases below expectations and selective discretionary spending, particularly in Retail and Hi-Tech. Offshoring headwinds and weakness at a manufacturing client also remain relevant, with an estimated 1.8%–2% drag on full-year growth. These pressures matter beyond one company: a lower outlook from a large IT exporter can prompt investors to reassess how much demand and pricing strength to expect across the sector.

A sharp October advance made the sector vulnerable to selling

The decline followed a strong run. Through Tuesday, the Nifty IT index had gained 12% in October, while the Nifty 50 was down 0.05% over the same period. Infosys had risen 17% in the month through Tuesday, after touching a 52-week low of ₹980.40 on September 29. Against that backdrop, the guidance cut and a cluster of analyst downgrades gave investors a reason to book profits.

At least four analysts downgraded Infosys after the outlook reduction, and its consensus rating fell to 3.7 out of 5, the lowest since January 2024. The pressure was not mirrored by US markets, which closed higher on Tuesday as AI-related stocks supported sentiment. That contrast points to a company- and sector-specific reassessment in India rather than a uniform retreat from technology shares globally.

AI brings both disruption concerns and a longer-term opportunity

Investors are weighing two sides of the AI debate. Concerns about disruption and productivity gains are adding uncertainty to traditional services growth, while Infosys management has pointed to strong AI growth as a support for FY28. The company also cited a signed net-new mega deal and a healthy pipeline that includes additional mega deals. Those are potential growth supports, but they do not remove the near-term uncertainty reflected in the revised FY27 outlook.

Stable margins may cushion earnings, but analysts have cautioned that this alone is unlikely to generate a meaningful acceleration while revenue growth remains subdued and pricing pressure persists. The lower end of the guidance range assumes further macro deterioration, while the upper end depends on an improvement in the environment. Investors will therefore be watching whether demand, deal conversion and pricing improve enough to validate the more constructive longer-term view.

Key Highlights

• The Nifty IT index fell as much as 4% in Wednesday’s intraday trade.
• Infosys cut its FY27 constant-currency revenue growth guidance to 1%–2% from 1.5%–3.5%.
• Infosys, Mphasis and Coforge were among the steepest decliners, falling 5%–6%.
• The IT index had advanced 12% in October through Tuesday, leaving recent gains exposed to profit booking.
• Management cited AI growth, a signed mega deal and a healthy pipeline as supports for FY28.

Investor Note: The sector’s decline reflects a mix of weaker near-term growth expectations, analyst downgrades and profit-taking after a strong rally. Investors may want to distinguish those immediate pressures from the longer-term opportunity management sees in AI and its deal pipeline, while tracking whether demand and pricing recover.