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[I] IT Stocks Outlook: May fall more next wk; Q4 results, mgmt comments in focus

Informist, Friday, Apr. 24, 2026

MUMBAI – Shares of information technology companies are expected to remain under pressure in the near term as investor sentiment turned cautious after some domestic players gave a conservative growth outlook for 2026–27 (Apr-Mar), rising concerns over a further slowdown in demand amid the uncertain geopolitical environment. Meanwhile, further weakness in the rupee against the dollar may prompt occasional upticks in IT stocks, as these companies earn a major share of their revenue in dollars, according to analysts. 

Stock-specific movements in response to March-quarter earnings and management commentary are expected in the coming week, analysts said. Mid-cap technology company Mphasis will announce its March quarter earnings Wednesday and Newgen Software Technologies on Thursday. Among major domestic players, Infosys, Tech Mahindra, Tata Consultancy Services, Wipro, HCL Tech, LTI and Persistent Systems have announced their quarterly earnings so far. 

Domestic IT stocks had been under selling pressure since early February amid rising concerns about artificial intelligence-led revenue deflation. So far, the Nifty IT index has fallen by over 29% from its Feb 3 peak. Adding to the worries, many IT companies signalled a potential impact on sales due to AI-led disruption in their post-earnings conference calls. Weaker-than-expected revenue growth guidance from IT giants Infosys, HCL Tech, and Wipro further dampened investor sentiment on these stocks.

Sustained large deal wins in FY26, AI-first transformation tailwinds, and disciplined capital allocation have enhanced long-term visibility for the sector, but the FY27 guidance reiterates the seriousness of AI-led deflation, Nirmal Bang Institutional Equities said in a report. The brokerage remains underweight on the sector for 2026 due to generative AI-led risks. IT companies are entering a phase in which risks emerge simultaneously at both ends of the current AI technology cycle. In one case, accelerated AI adoption will begin to compress demand for traditional services and reshape delivery models. In the second case, if AI fails to scale or deliver tangible returns, technology budgets globally are likely to tighten meaningfully, the brokerage said.  

This week, the Nifty IT index fell by over 10%, compared with around 2% decline in the benchmark Nifty 50 and BSE Sensex. Friday, the index closed over 5% lower at 28530.60 points, with all constituents except Oracle Financial Services ending in the red.

In the near term, 32000 points will act as immediate resistance for the index, Rishabh Srivastava, technical analyst at Lakshmishree Investment and Securities Pvt. Ltd., said. "The next strong resistance zone is placed around 36000–37000, while a major supply area remains near 40300. On the downside, the index is approaching a crucial support zone around 28500–28000. If this level holds, a short-term consolidation or bounce can be expected," he said. "However, a breakdown below 28000 (points) may trigger further selling towards 26200 (points)."    

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The following are the resistance and support levels for key IT stocks for next week, as per calculations based on their prices on the National Stock Exchange:

End

US$1 = INR 94.25

Reported by Arya S. Biju

Edited by Saji George Titus

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